Dollar Set for Best Week in a Month as Haven Flows Offer Support

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Or sign-in if you have an account.v1i{0sr]ar3dco2h90d)uade_media_dl_1.png Bloomberg(Bloomberg) — The dollar is heading for its best week in a month as investors return to the traditional haven amid heightened geopolitical tensions.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe greenback sits near a three-week high reached Thursday, with demand supported by an escalating Middle East conflict and a fresh round of US tariffs. One-week options positioning turned the most dollar-positive in a month, a sign that traders are paying up for protection ahead of next week’s Federal Reserve meeting.Beneath the geopolitical headlines, US interest-rate volatility has re-emerged as a key driver of foreign-exchange markets. Investors have less clarity than usual on where the Federal Reserve is heading, and the resulting swings in bond markets are pushing money toward the dollar and other perceived safe assets. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe ICE BofA MOVE Index, a widely watched gauge of expected Treasury-market volatility, climbed to its highest level since May and is on track for its longest streak of gains since November.“US rate volatility is rising and moving to front of mind for the market,” said BNY strategist David Tam. “This will become a direct driver of FX performance benefiting safe-haven and funding currencies while hurting high-beta, carry currencies.”Intensifying conflict in the Middle East has raised the prospect of energy supply disruptions, reinforcing expectations that central banks may need to keep interest rates higher for longer. Separately, the US said it will collect duties of between 10% and 12.5% on imports from most major trading partners, the biggest step yet to rebuild President Donald Trump’s tariff wall after the Supreme Court struck down earlier measures.Oil is also beginning to reshape currency performance, creating a wider divide between energy exporters and importers. “The dollar is beginning to acquire some degree of a front-footed nature,” said Kamakshya Trivedi, chief FX and emerging markets strategist at Goldman Sachs Group Inc. “You are beginning to see those terms-of-trade distinctions start to play out versus the oil exporters and oil importers.”Markets have repriced accordingly. The yield on 10-year Treasuries touched 4.7117% Friday, the highest since mid-January, and traders now assign a one-in-three probability for a quarter-point Fed rate increase next week. The dollar pared its weekly advance in early London trading Friday as some traders closed out short-term bullish bets before the weekend, though the underlying demand held.“The dollar continues to perform well as high energy prices raise expectations for a central bank response,” said Chris Turner, global head of markets at ING. “While we do not think the Fed will hike next week, it remains very dangerous to fight this trend and we expect the dollar to outperform.”—With assistance from Anna Boyne.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.