Dollar slips as risk appetite recovers despite Brent climbing above $90

SINGAPORE: The US dollar weakened in Asian trading on Monday, ending a three-day advance as demand returned for risk-sensitive currencies despite an escalation in the US-Iran conflict and Brent crude rising above $90 a barrel.

The dollar index, which tracks the currency against six major peers, fell 0.1% to 100.69 after three consecutive sessions of gains.

Brent crude futures climbed 2.6% to $90.37 a barrel after the United States said it had begun a ninth consecutive night of attacks against Iran. Washington had earlier announced that at least two US military personnel were killed in Jordan.

The euro gained 0.1% to $1.1444 ahead of the European Central Bank’s meeting later this week, while sterling rose 0.1% to $1.3463 as Andy Burnham prepared to replace Keir Starmer as prime minister.

IG market analyst Fabien Yip said the movement reflected renewed support for higher-risk currencies rather than broad weakness in the dollar.

The Australian dollar advanced 0.2% to $0.6996, while the New Zealand dollar gained 0.3% to $0.5858.

The dollar was unchanged at 162.335 yen in thin trading as Japanese markets observed the Marine Day holiday.

Against the Chinese yuan, the dollar declined 0.1% to 6.772 yuan in offshore trading after China kept its benchmark lending rates unchanged for a 14th consecutive month, in line with expectations.

Markets continued to expect the Federal Reserve to leave interest rates unchanged at its July 29 meeting. Fed funds futures indicated an 85.6% probability of no change, up from 61.5% a month earlier, according to the CME Group’s FedWatch tool.

Cleveland Fed President Beth Hammack said on Friday that interest rates may need to rise to contain persistent inflation, raising the possibility of policy disagreements at Chair Kevin Warsh’s second meeting in charge.

In cryptocurrency trading, bitcoin rose 0.2% to $64,637.89, while ether gained 0.4% to $1,872.71.