The U.S. dollar, often seen as a safe haven, remained near its peak levels for the year on Thursday. This stability comes as rising oil prices raise concerns about inflation, potentially prompting central banks worldwide to shift towards more aggressive monetary policies. The euro experienced a decline of 0.1% against the US dollar, trading at $1.1549 in early Asian markets, approaching its lowest point since November. Japan’s yen experienced a brief decline, dipping past the 159-per-dollar threshold, easing by as much as 0.2% to 159.23, and nearing its weakest level since July 2024. The Australian dollar experienced a decline of 0.1%, settling at $0.7148, whereas the New Zealand dollar also fell by 0.1%, reaching $0.5907. The British pound experienced a decline of 0.2%, trading at $1.3385.

The oil market experienced heightened volatility as Iran indicated that the global community should prepare for crude prices reaching $200 a barrel. This statement coincided with military actions targeting merchant ships on Wednesday, leading to a significant reduction in vessel traffic through the Strait of Hormuz. Economists caution that the increase in oil prices, driven by a deteriorating supply outlook, will elevate energy costs and hinder global growth, with risks escalating as the conflict persists. U.S. President Donald Trump stated on Wednesday that Washington was in “very good shape” regarding its efforts against Iran, and the U.S. was “going to look very strongly at the Straits.” However, sources informed that U.S. intelligence suggests that Iran’s leadership remains largely intact and is not at risk of collapse in the near future following nearly two weeks of continuous U.S. and Israeli bombardment. President Trump continues to assert, even overnight, that the war will conclude soon – it remains uncertain to us that this is truly within his control,” stated Rodrigo Catril. “We should anticipate continued fluctuations in energy prices,” he stated during a podcast. The Strait of Hormuz encompasses more than just oil; it also involves LNG and fertilizers,” he added. “As the inability to proceed persists, the pressure on prices is likely to remain.”

Brent crude increased by 6.9% to $98.30 at the beginning of Asian trading, despite the International Energy Agency’s decision on Wednesday to release a record 400 million barrels of oil from strategic stockpiles in response to a surge in global crude prices. A measure of oil market volatility from Cboe, which has increased for seven of the eight trading sessions since the conflict began, soared on Wednesday to 121.01, reaching the highest levels since 2020, during the early days of the pandemic. The risk appetite experienced a notable decline following the announcement from U.S. President Donald Trump’s administration on Wednesday, which initiated a new trade investigation into excess industrial capacity among 16 major trading partners.

This action appears to be a strategic effort to restore tariff pressure after the U.S. Supreme Court recently invalidated the core element of Trump’s tariff program. U.S. breakeven inflation and swap spreads are expanding,” analysts noted in a communication to clients, also indicating that in the euro zone the 10-year swap rate is approaching 3%. Swaps pricing suggests that traders anticipate a quicker tightening of monetary policy by central banks than was previously expected. The European Central Bank is anticipated to raise rates as early as June, while the Reserve Bank of Australia is expected to implement hikes at its upcoming meeting next week and potentially again in May, based on LSEG data.