Dollar eases with oil on hopes of swift end to Iran war

The dollar lost some of its safe-haven appeal on speculation that the war in the Middle East could prove limited on Tuesday, pulling down skyrocketing ​oil prices and boosting risk assets.

At 157.73 yen and $1.1632 per euro, the ‌greenback was firm in early Asia trade, but it has retreated from day-earlier highs after US President Donald Trump said war against Iran was "very complete." Washington was "very far ahead" of his initial four- to five-week ​time estimate, he told CBS News.

The comments were quickly rejected as "nonsense" by Iran's Revolutionary ​Guards, but they seemed to hold traders back from deepening worries about ⁠an oil shock and put them in a wait-and-watch stance.

Brent crude futures traded at $92.46 ​a barrel in the Asia morning, down from highs near $120 on Monday.

The risk-sensitive Australian dollar , ​which has loitered around 70 cents since war broke out, steadied at around $0.7068.

"The market is just taking a breather," said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.

"We're cautious in the sense ​that it may not be as simple as just declaring the end of the ​war ... our sense is that we haven't seen the end of the volatility."

The dollar has been traders' ‌shelter-of-choice as ⁠US and Israeli attacks on Iran have all but frozen oil and gas exports through the Strait of Hormuz, sending energy prices soaring.

Investors are worried that could curtail global growth by acting as a tax on business and consumption, while at the same time pushing central banks ​away from easing rates.

Sterling ​recovered from a ⁠Monday dip to hold at $1.3412 and the New Zealand dollar steadied at $0.5932.

A Deutsche Bank analysis on Monday suggested larger market moves out of ​risky assets could require oil prices to stay at higher levels, a ​policy pivot ⁠from central banks and tangible signs of a broader economic slowdown.

"How close are we to meeting those thresholds? Much closer than a week ago," said strategist Henry Allen.

"But on several metrics ⁠we aren't ​quite there yet, which explains why equities aren't yet ​seeing bear-market declines, like we saw in 2022," he said, referring to the aftermath of an energy shock triggered ​by Russia's invasion of Ukraine.