(Bloomberg) -- The dollar rose on haven flows as fighting between the US-Israeli alliance and Iran continued, even as President Donald Trump claimed talks are under way to end the war. The Australian dollar was the worst performer in the Group of 10 ahead of domestic inflation data.
- The Bloomberg Dollar Spot Index rose 0.2% after climbing as much as 0.4% in earlier trading
- “Iran and Israel striking each other over night has driven safe haven demand for the dollar as there is no operational equivalent to Trump’s pause from either of them,” said Monex’s Andrew Hazlett. “Trump’s statements lead to a mispricing in risk as there was no true de-escalation and you can’t flip an on/off switch in war — markets are pricing that risk back in this morning”
- US private payrolls rose an average of 10,000 per week in the four-week period ending March 7, according to a preliminary estimate from ADP Research and the Stanford Digital Economy Lab
- Growth in US business activity slowed in March to an almost one-year low and prices paid for materials and other inputs picked up.
- The S&P Global flash March composite index fell 0.5 point to 51.4, data released Tuesday showed. Figures above 50 indicate expansion
- “The US flash PMI data for March challenges the FOMC benign stagflation narrative,” said Elias Haddad, global head of markets strategy at Brown Brothers Harriman. “Input and output prices spiked due to the energy price jump caused by the war”
- “The impact of the Iran conflict is starting to show up in the PMIs,” said Win Thin, chief economist at Bank of Nassau 1982. “The thinking goes that the US is much less vulnerable to the energy price spike than Europe or Asia, but it’s certainly not invulnerable”
- EUR/USD fell 0.2% to 1.1589; private-sector activity in the euro area rose at the slowest pace since last May as the war stokes inflation while endangering a nascent economic recovery
- AUD/USD dropped 0.7% to 0.6964
- Australia’s February CPI report is likely to show inflation holding steady above the Reserve Bank’s 2%-3% target band, according to James McIntyre at Bloomberg Economics
- NZD/USD declined 0.6% to 0.5825; New Zealand’s central bank governor signaled policymakers won’t rush to raise interest rates in response to the Middle East conflict, saying they are prepared to wait out surging fuel costs provided the disruption doesn’t fan broader inflation pressures
- USD/JPY advanced 0.2% at 158.79
Reporting by Anya Andrianova and Vassilis Karamanis
