Dollar jumps as failed US/Iran peace talks spark fresh safe-haven push

SINGAPORE: The safe-haven dollar advanced broadly in early Asian trade on Monday , as ​peace talks between the US and Iran broke down and the US Navy ‌prepared a blockade of Iranian ports. The euro was down 0.3% at $1.1684, while the British pound fell 0.5% to $1.3398. The risk-sensitive Australian dollar was 0.6% lower at $0.7030, and the New Zealand dollar was off 0.4% at $0.5816. US President Donald Trump said ​on Sunday the US Navy would start blockading the Strait of Hormuz ​after marathon talks with Iran failed to reach a deal to ⁠end the war, jeopardizing a fragile two-week ceasefire. The U.S. Central Command said ​U.S. forces would begin implementing the blockade of all maritime traffic entering and exiting ​Iranian ports from 10 a.m. ET (1400 GMT) on Monday. “Early and thin FX trading this morning is showcasing a risk-off mood, with the broad-based rally in the USD in response,” analysts from Westpac ​wrote in a research note. The Hungarian forint surged after veteran nationalist leader Viktor ​Orban lost power to the upstart centre-right Tisza party in Sunday’s national election after 16 years in ‌office. The ⁠currency rallied as much as 1.8% to 314.89 against the dollar, its strongest level since January, and jumped 2.2% against the euro to its firmest in four years. “Hungarian assets have reacted positively to the news in early trading, in part because ​the outcome implies that ​EU fund inflows ⁠into Hungary will be fully released relatively quickly,” analysts from Goldman Sachs wrote in a research report. “EU funds from the ​current 2021-27 budget account for roughly 3% of GDP per ​year, with ⁠nearly half currently frozen.” US warships transit Strait of Hormuz The US dollar index , which measures the greenback’s strength against a basket of six currencies, held steady at 99.056, near its highest level since April 7. Against the ⁠yen , ​the US dollar was up 0.4% at 159.83 yen ​as yields on Japan’s benchmark 10-year government bonds jumped 5.5 basis points to 2.49%, the highest level in ​almost three decades.

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