The dollar surged as the war in the Middle East panicked investors and stoked US inflation fears.
Stock markets tumbled and oil prices spiked after the US assault on Iran, with even traditional haven investments such as gold falling. The market was further rattled by President Donald Trump warning that the conflict could continue for some weeks, CNBC reported.
The news is good for dollar holders, but likely only in the short term: While inflation could stave off rate cuts, which would make dollar-denominated assets less attractive, in the longer run that same inflation would reduce the currency’s value. If the dollar has got “its mojo back,” Reuters’ finance editor noted, it is “only by default.”