Forex Today: Oil and US Dollar climb once more as investors seek safe-haven assets

Thursday, March 12 Market Overview

As Thursday unfolds, here are the key developments shaping global markets:

Geopolitical Tensions Impact Market Sentiment

Investor caution has increased in the latter part of the week, driven by escalating turmoil in the Middle East. The US will release January data on Housing Starts and Goods Trade Balance, along with the weekly Initial Jobless Claims report.

Oil Supply Concerns and Emergency Reserves

On Wednesday, the International Energy Agency (IEA) revealed that all 32 member nations have agreed to supply 400 million barrels of oil from their emergency reserves to the market. While this move helped cap gains in crude oil prices, renewed worries about supply disruptions emerged as fresh headlines from the Middle East surfaced.

Regional Developments Affecting Oil

• Iraq halted operations at its oil ports following Iranian attacks on two foreign tankers.
• Bahrain, Kuwait, and the United Arab Emirates intercepted missiles and drones launched by Iran.
• Saudi Arabia’s Defence Ministry reported the destruction of two drones approaching the Shaybah oilfield over the Empty Quarter desert.

China Restricts Fuel Exports

According to Reuters, China has imposed an immediate ban on refined fuel exports for March. This action aims to prevent a potential domestic fuel shortage amid the ongoing US-Israeli conflict with Iran.

Commodity and Currency Movements

• West Texas Intermediate (WTI) crude was last trading at $90.40, up roughly 3.5% for the day.
• Brent crude rose 3%, reaching $94.40 per barrel.
• The US Dollar (USD) is strengthening as risk aversion grows, with the USD Index holding just below 99.50. Meanwhile, US stock index futures are down between 0.7% and 0.9%.
• EUR/USD continues to decline, trading near 1.1550 after slight losses on Wednesday.
• GBP/USD remains under downward pressure due to USD strength, falling below 1.3400 in Thursday’s European session.
• USD/JPY climbed over 0.5% on Wednesday, reaching its highest point since mid-January above 159.20 in early Asian trading. The pair has since eased slightly, trading just under 159.00 in Europe.
• Gold is relatively stable early Thursday, hovering below $5,200.