US, Mar 17 : The U.S. dollar showed little movement on Tuesday as investors digested developments in the Iran conflict, while the Australian dollar eased slightly ahead of the Reserve Bank of Australia’s (RBA) anticipated rate hike.
In Asian trading, the euro slipped 0.12% to $1.1492, and sterling fell 0.1% to $1.33, retracing previous session gains. The dollar index remained largely unchanged at 99.913.
Market jitters resurfaced after key U.S. allies declined President Donald Trump’s request to escort oil tankers through the Strait of Hormuz, raising fresh concerns over energy supply stability. Surging oil prices linked to the U.S. and Israel’s war on Iran have intensified inflation fears, prompting a global repricing of interest rate expectations and boosting the dollar.
Investors are now focused on the RBA meeting, with markets pricing in roughly a 78% chance of a 25-basis-point hike. The Australian dollar slipped 0.16% to $0.706, while the New Zealand dollar fell 0.24% to $0.5848.
Kyle Rodda, senior analyst at capital.com, noted, “The policy response to the crisis will begin to crystallise in the coming days,” highlighting likely divisions among central banks over whether to address the supply shock or maintain existing policy paths.
The Japanese yen weakened to 159.35 per dollar, nearing the critical 160 mark, as analysts warned that intervention thresholds may rise amid soaring oil prices. Since the outbreak of the conflict in late February, the yen has lost more than 2% against the dollar.
Prashant Newnaha, senior rates strategist at TD Securities, explained, “Rising oil costs and Japan’s energy dependence risk stoking inflation and widening the trade deficit. Authorities will eventually need to prioritize protecting the yen or the bond market they can’t do both.”
This week’s RBA meeting marks the start of a series of central bank events that will shape market expectations on inflation, growth, and the broader impact of geopolitical tensions on global currencies.