The U.S. dollar index rose 0.2% to 101.10 at 16:56 ET (20:56 GMT) as heightened geopolitical risk in the Middle East boosted safe‑haven demand for the greenback. The Treasury Department’s Office of Foreign Assets Control (OFAC) revoked the general license that had authorized the production, delivery and sale of crude oil, petrochemical and petroleum products of Iranian origin, a move described by U.S. officials as a response to fresh attacks on shipping in the Gulf.
The United Kingdom Maritime Trade Operations (UKMTO) reported attacks on three oil tankers in the Strait of Hormuz within 24 hours: two were struck by unknown projectiles and a third by a drone, with no casualties reported. The agency raised the regional threat level from “substantial” to “severe.” Both Reuters and Axios, citing a U.S. official, said the attacks were blamed on Iran, calling the actions “unacceptable” and promising “consequences,” while noting that negotiations continued in “good faith.” Qatar identified one of the vessels as the Al‑Rekayyat and held Iran fully legally responsible; Saudi Arabia identified another as the Saudi tanker Vijian and issued a similar condemnation.
Oil prices spiked more than 5% following the incidents. In currency markets, the euro slipped 0.3% to $1.1411, while the Japanese yen remained near 40‑year lows against the dollar at 162.10 and touched its lowest level against the British pound since 2007, keeping the pair in potential intervention territory.
German industrial production for May rose 0.9% year‑on‑year, comfortably beating a Reuters poll forecast of 0.2%; the increase was driven largely by a 3.6% jump in automotive output. Despite the manufacturing surprise, ECB Governing Council member and Bank of Italy Governor Fabio Panetta warned that the euro‑zone outlook remained fragile as the global economy underwent a profound structural shift.
Japanese wage data showed growth for a fifth consecutive month in May, supporting expectations of further Bank of Japan rate hikes, though the USD/JPY pair was little changed.
Federal Reserve Chair Kevin Warsh, who took office last month, reiterated that the Fed will abandon forward guidance and focus solely on combating inflation. Warsh emphasized that inflation risks have declined and that the minutes of the June 16‑17 FOMC meeting, to be released on Wednesday, will be the first under his “Warsh era” of reduced communication. Half of the committee members indicated that additional rate hikes could be warranted this year. JPMorgan chief U.S. economist Michael Feroli noted that the new format for post‑meeting statements may also affect the minutes, but that the impact is likely limited.
Overall, the combination of Middle‑East geopolitical escalation, the revocation of the Iranian oil license, rising oil prices and a cautious monetary‑policy backdrop has reinforced the dollar’s safe‑haven appeal.