EconoTicker

Bank of America says the U.S. dollar is now the only truly reliable refuge in foreign-exchange markets as investors increasingly position for a longer Middle East war and higher energy prices. In the bank’s latest note, strategists led by Adarsh Sinha said bullish dollar signals have been triggered against other perceived safe havens, with option flows also showing strong demand for USD calls. BofA’s tactical view favors bullish USD/SEK and bearish NZD/USD, while arguing that even traditional havens such as the euro, yen, and Swiss franc have been losing relative ground versus the dollar.

The latest market levels broadly fit that theme. The Dollar Index (DXY) was around 99.51, USD/SEK traded near 9.27, NZD/USD around 0.5867, EUR/USD near 1.1543, USD/JPY around 158.73, and USD/CHF near 0.7853. Even with the dollar taking a brief pause as oil cooled somewhat, BofA’s message is that, until clear de-escalation emerges, the greenback remains the market’s preferred defensive currency.

Source: Bank of America note; Reuters; Investing.com.

Asian currencies traded unevenly, with the Chinese yuan outperforming after a stronger PBOC midpoint fix helped push USD/CNY down 0.2% earlier in the session. The Singapore dollar lagged slightly after February non-oil exports grew less than expected, with USD/SGD up 0.1%. The South Korean won also weakened, with USD/KRW rising 0.2%, while the Taiwan dollar initially outperformed, with USD/TWD down 0.2% in the earlier move. The Indian rupee remained under pressure, with USD/INR up 0.1% earlier and still trading close to record-weak levels despite signs of RBI-backed smoothing in the market.

On the latest available pricing, USD/CNY was around 6.8878, USD/SGD around 1.2795, USD/KRW around 1,494.54, USD/TWD around 31.954, and USD/INR around 92.437. That leaves the broad message unchanged: the yuan is holding up relatively well, while higher oil prices and regional risk are still keeping pressure on currencies such as the rupee and won.

Source: Investing.com; Reuters.

The Japanese yen remained under pressure, with USD/JPY around 159.31, leaving the currency just below the closely watched 160 threshold despite fresh verbal warnings from Japanese officials. Analysts say the hurdle for direct intervention is now higher because rising oil prices are making yen weakness look more tied to fundamentals than to one-way speculation. The yen is down more than 2% against the dollar since the Iran war began at the end of February.

At the same time, Bank of Japan Governor Kazuo Ueda said underlying inflation is accelerating toward the BOJ’s 2% target ahead of the central bank’s two-day policy meeting ending on Thursday, March 19, 2026. Markets still broadly expect the BOJ to keep rates unchanged at 0.75%, which means the near-term focus remains on whether inflation pressure and energy costs eventually force a stronger policy response.

Source: Reuters.

The euro was trading around $1.1499, while sterling held near $1.33115, keeping part of the strong rebound from the previous session. At the same time, the U.S. Dollar Index (DXY) was little changed around 99.894, though it remains up by more than 2% this month, showing that the dollar is still broadly supported despite a pause in momentum.

The broader market message is that the dollar is still benefiting from safe-haven demand linked to Middle East tensions and oil-driven inflation risks, while the euro and pound are stabilizing rather than fully reversing the recent dollar strength.

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.10%, as expected, but the market focused more on the narrow 5–4 vote, which signaled that further tightening is far from certain. The RBA said there is a “material risk” inflation will remain above target for longer than previously expected, and warned that Middle East uncertainty could add to both global and domestic inflation pressures.

Despite the rate hike, the Australian dollar softened, with AUD/USD around 0.7060, as traders scaled back expectations for another move in May. At the same time, Australia’s 3-year government bond yield fell to 4.509%, while markets trimmed the probability of another May hike to about 30%. The reaction suggests investors saw the decision as hawkish in action, but less aggressive in forward signal.

Source: Reserve Bank of Australia; Reuters.

Asian currencies traded with a mixed tone. The Japanese yen strengthened modestly, with USD/JPY slipping to around 159.39, while the Singapore dollar was slightly firmer, with USD/SGD near 1.2816. The Indian rupee stayed under pressure, with USD/INR around 92.625 after touching a record 92.711 intraday. The South Korean won also advanced, with USD/KRW easing to about 1,495.63. Meanwhile, the Australian dollar outperformed in the region, with AUD/USD rising to around 0.7016 ahead of the RBA decision.

Source: Investing.com.

The U.S. dollar stayed firm in Asian trading after a strong safe-haven rally tied to the Iran war and fears that higher oil prices could feed another wave of energy-driven inflation ahead of the Federal Reserve meeting. The U.S. Dollar Index (DXY) was around 100.20–100.30, still close to last week’s 10-month high, while June dollar index futures hovered near 100.04–100.05.

The broader message from the market is that the dollar remains well supported by geopolitical risk, elevated oil prices, and caution over how central banks will respond if the Middle East shock starts pushing inflation expectations higher again.

Source: Reuters; Investing.com.

China’s latest activity data came in stronger than expected, with industrial production and retail sales for January–February 2026 both beating forecasts. Even so, the USD/CNY pair rose about 0.1% to around 6.9004, suggesting the foreign-exchange market remained cautious despite the firmer macroeconomic data.

The move shows that while stronger Chinese data helped sentiment, currency trading is still being shaped by broader global risk conditions and dollar demand.

Source: Reuters; Investing.com.

The Indian rupee fell to a new all-time low on Thursday, weakening to 92.3575 per dollar as renewed energy-supply fears pushed oil prices sharply higher and raised fresh risks for major importers such as India. Reuters reported that the move broke the previous record low of 92.3475 set earlier this week, underscoring how sensitive the rupee remains to crude-price volatility and Middle East disruption.

Losses were partly capped by likely central-bank dollar selling, according to traders cited by Reuters, suggesting the Reserve Bank of India stepped in to smooth the move rather than allow a sharper slide. The pressure on the rupee reflects a broader market concern that higher oil prices could worsen India’s inflation outlook and external balance if supply disruption persists.

Source: Reuters.

Broader Asian currencies remained under pressure as investors stayed cautious over the Iran conflict and its implications for oil prices and regional growth. In Tuesday trading, AUD/USD fell 0.2%, USD/KRW jumped 1.1%, USD/SGD rose 0.1%, and USD/INR added 0.1%, pushing the rupee pair further above the 92 level. The moves suggest markets are still favoring the U.S. dollar over more oil-sensitive or risk-linked regional currencies.

The pattern reflects a familiar stress response in Asia: currencies tied more closely to imported energy costs or broader risk sentiment tend to weaken when geopolitical tensions remain unresolved. Even with some rebound in regional equities, the FX market is still signaling caution rather than a full return to confidence.

Source: Investing.com.

The Japanese yen stayed under pressure on Tuesday, with USD/JPY up about 0.1%, as dollar strength and concern over energy disruption risks continued to weigh on sentiment. At the same time, Japan’s revised Q4 2025 GDP showed the economy was stronger than first reported, with growth revised up to 0.3% quarter-on-quarter and 1.3% annualized. The revision was supported by firmer private consumption and stronger business investment, pointing to better domestic resilience than the initial estimate suggested.

Even so, the data still pointed to a mixed backdrop. Private consumption was revised to 0.3% q/q, while private non-residential investment rose 1.3% q/q; however, external demand was flat, showing exports were still not providing much support. That combination suggests Japan’s domestic economy is holding up, but the yen remains vulnerable as markets focus more on oil risk and dollar strength than on the GDP upgrade itself.

Source: Cabinet Office of Japan; Investing.com.

China’s yuan outperformed most regional currencies on Tuesday, with USD/CNY briefly falling back below 6.9 as investors reacted to a stronger trade print and a firmer official midpoint signal from the People’s Bank of China. Market reporting said the pair fell as much as 0.3%, showing the yuan held up better than many Asian peers despite broader geopolitical uncertainty.

The move came after China’s latest trade data showed a much stronger start to 2026 than expected. Reuters reported that exports rose 21.8% year-on-year in January-February, while imports increased 19.8%, lifting the trade surplus to $213.6 billion. The figures suggest China’s export machine remains a key support for growth, while stronger Lunar New Year spending also helped imports beat expectations.

Source: General Administration of Customs of China; CFETS / People’s Bank of China; Reuters; Investing.com.