FOREX: Dollar at week-high after US resumes Iran strikes

SINGAPORE — The U.S. dollar climbed to a one-week high in Asian trading on Wednesday as renewed U.S. strikes on Iran boosted demand for safe-haven assets, while the New Zealand dollar gained after the country's central bank raised interest rates and signaled further tightening.

The greenback strengthened 0.2% to 162.46 yen, extending its gains for a fourth consecutive day and reaching its strongest level since July 2. The euro slipped 0.1% to $1.1405, while the British pound edged 0.1% lower to $1.3351.

Meanwhile, the New Zealand dollar jumped 0.5% to a high of $0.5705 after the Reserve Bank of New Zealand raised its benchmark interest rate by 25 basis points to 2.5% to address inflation pressures. The move was widely expected by economists, and the central bank said further reductions in monetary stimulus would likely be needed to bring inflation under control.

The Australian dollar gained 0.1% to $0.6938.

The U.S. dollar index, which measures the currency against a basket of six major currencies, reached 101.210, its highest level since July 2.

Demand for the dollar, widely viewed as a global safe-haven currency, increased after the United States launched a new wave of strikes against Iran on Tuesday and revoked a license that allowed the country to sell oil following attacks on three tankers in the Strait of Hormuz.

"For now, the market is keeping to the playbook that Tehran and Washington are still in a high-stakes game to gain leverage during the temporary truce, and that Tuesday’s incident would not descend back into a full-scale war," DBS analysts said in a research report.

The analysts warned that the bigger risk remained the expiration of the interim ceasefire agreement in mid-August and possible tensions over transit fees in the Strait of Hormuz.

Brent crude futures rose 2.5% to $76.03 a barrel in Asian morning trading on Wednesday, extending gains for a second consecutive session.

The Japanese yen moved closer to a fresh 40-year low after Bank of Japan board member Toichiro Asada, the only dissenter in the central bank’s June decision to raise interest rates, told Reuters that he would need to see signs of demand-driven inflation before supporting additional rate hikes.

In cryptocurrency markets, bitcoin fell 1.3% to $62,851.94, while ether declined 1.9% to $1,749.96.

-Reporting by Gregor Stuart Hunter; Editing by Stephen Coates and Kevin Buckland/Reuters