Dollar off highs, remains elevated on safe-haven bids, rate jitters
investing.comBy Rae Wee
SINGAPORE (Reuters) — The dollar came off highs in Asian trade on Monday, but held at elevated levels as Middle East tensions escalated, and investors awaited clues to the outlook for U.S. interest rates from a speech by Federal Reserve Chair Jerome Powell later this week.
The dollar stayed near a one-week high against the euro and sterling as risk sentiment remained fragile.
The euro was last 0.13% higher at $1.05265, having slid to a one-week low of $1.0496 on Friday.
Sterling gained 0.13% to $1.2160, steadying from Friday's one-week low of $1.2123.
The dollar index fell 0.07% to 106.49.
«I view what's going on in Israel as a regional conflict, which typically does not have meaningful impacts on financial markets over time,» said David Chao, Invesco's global market strategist for Asia Pacific ex-Japan.
«I don't see it altering growth trajectories of the major economies nor does it make the Fed more hawkish. If anything, I think the Fed is less inclined to tighten going forward given the perception of heightened risks.»
Elsewhere, the Israeli shekel slid to a more than an eight-year low of 3.99 per dollar, after the country's Prime Minister Benjamin Netanyahu vowed on Sunday to «demolish Hamas» as his troops prepared to move into the Gaza Strip.
The shekel has fallen more than 3% against the dollar since gunmen from the Palestinian group Hamas rampaged through Israeli towns on Oct. 7.
The yen was last 0.1% stronger at 149.39 per dollar, edging away from the sensitive 150-level. Some traders expect an increased potential for Japanese authorities to intervene to suppot the yen if it weakens past that level.
Carry trades funded by the yen could be the biggest casualty of further escalation in the war, analysts
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