Dollar surges in Asia as war's safe-haven shelter

The dollar headed for its biggest monthly gain since July on Tuesday and stands out as the strongest so-called safe asset as war in the Middle East has set oil prices surging, nearly everything else sinking and raised the risk of global recession.

A Wall Street Journal report that U.S. President Donald Trump is willing to end attacks on Iran without forcing open the Strait of Hormuz, according to unnamed officials, set crude slightly lower in Asia trade but hardly budged the dollar.

It pushed 1% ‌higher on South ⁠Korea's won ⁠to 1,534 won, levels touched only in the wake of the global financial crisis in 2009 and the Asian financial crisis in 1997 and 1998.

The euro was kept below $1.15, while sterling and the Australian and New Zealand dollars were pinned to multi-month lows.

Renewed threats of intervention from Tokyo spared extra selling pressure on the yen, which touched its weakest since July 2024 on Monday and trades at 159.52 per dollar.

The dollar has been supported by the U.S. status as an energy exporter, by rising U.S. Treasury yields and by investors' flight to cash over the past month ⁠of conflict, ‌with Asian currencies suffering some of the largest losses.

"Barring any clear, conciliatory messages from the Iranian side, it is hard to see the dollar handing back this month's gains anytime soon," said Chris ⁠Turner, ING's global head of markets.

DOLLAR STANDS TALL

Bonds, gold and safe-haven currencies such as the yen and Swiss franc have all fallen through March, as the energy shock delivered by $100-a-barrel crude oil exposed weaknesses.

The U.S. dollar index, meanwhile touched its highest since last May on Monday at 100.61 and, last sitting at 100.47, is up 2.9% through March, its sharpest monthly rise since July.

A looming inflation spike has hurt bonds. A positioning clearout has sunk gold, while the energy shock hurts Japan's terms of trade and Swiss authorities have indicated they would intervene to stem any steep gains for the franc.

The dollar is up ‌nearly 4% for the month on the franc at 0.80 francs and has broken resistance levels for the Aussie and kiwi in recent sessions. The kiwi, down six straight sessions, is on the verge of breaking below 57 cents.

The Aussie ⁠has fallen for eight sessions and hit a a two-month low of $0.6834, down 3.7% for March and under major support at $0.6897. Sterling hovered just above $1.32.

The main risk to the dollar might come from labour data due out in the liquidity vacuum of Good Friday, or, warned strategists at Union Bancaire Privee, a breakdown in the relationship that usually sees the dollar higher if stocks fall.

"FX - equity correlations have been quite stable since the outbreak of the conflict, though this could change if markets move to price in a more prolonged conflict - with still uncertain outcomes," they said.

March inflation data is due later in the session in Europe and is likely to rip back above the European Central Bank's 2% target.