Dollar Rises to Fresh 2018 Highs, Commodity Currencies Hit

On Tuesday, the dollar rose to fresh four month highs against a currency basket, sending the euro below $1.18, while commodity linked currencies fell along with oil prices ahead of an announcement on the future of the Iran nuclear deal.

The measure of the greenback’s strength against a basket of six major currencies, which is U.S. dollar index, climbed 0.31% to 92.89 by 05:02 AM ET (09:02 AM GMT), the highest level since late December.

In recent weeks, rising U.S. Treasury yields and broadly solid economic data have boosted the dollar, underlining expectations for a steady pace of interest rate increases by the Federal Reserve this year.

The central bank has projected two more increases for the year, but some investors expect three more.

With EUR/USD down 0.28% to a four month low of 1.1889, strength in the dollar pressured the euro.

After data showing that German industrial output rose more than expected in March, the euro failed to find much support. The report helped ease concerns that the euro area’s largest economy is facing headwinds from rising protectionism.

Data on Monday had shown that German industrial orders dropped for a third month running in March.

A recent soft patch of economic data has given rise to speculation that the European Central Bank may not be able to end its asset purchasing stimulus program in September, as some investors had expected.

With GBP/USD sliding 0.34% to 1.3511, sterling was also weaker, closing in on last Friday’s four month lows of 1.3485.

With USD/JPY last at 109.02, the dollar was little changed against the traditional safe haven yen, not far from an overnight high of 109.13.

The commodity linked currencies were pressured lower as oil prices fell sharply ahead of an announcement by U.S. President Donald Trump later in the day about the future of an international nuclear agreement with Iran, which he has repeatedly threatened to withdraw from.

With USD/CAD advancing 0.68% to 1.2966, the Canadian dollar fell to almost two-month lows.

The New Zealand dollar was at lows not seen since December, with NZD/USD losing 0.38% to trade at 0.6987, while the Australian dollar plumbed fresh eleven month lows, with AUD/USD down 0.6% to 0.7471. /

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