Dollar declines after Iran missile test

Story link: Dollar declines after Iran missile test

The US dollar weakened Wednesday after oil prices rose in the wake of reports that Iran has tested a missile said to be capable of reaching Israel and after new data showed that US oil inventories declined last week.

The test, which took place during war games at the mouth of the strategic Strait of Hormuz, was said to have been a demonstration that Iran is capable of retaliating in the event of an attack by the United States or Israel and took place just a day after the Iranian president said he did not believe that there would be any attack on his country.

In late-morning trade in New York, the dollar had dropped to $1.5743 to the euro while it took ¥107.0900 to buy a dollar.

The euro benefited from increased speculation that the European Central Bank will have to issue another interest rate increase to bring inflation into line.

The Canadian dollar also advanced against its US counterpart, with the loonie trading at C$1.0118 to the dollar after a report showing that there were more housing starts than expected in Canada in May and on the gain in oil prices.

Meanwhile, the South African rand advanced on the news that merger talks between Africa’s biggest mobile-phone operator and an Indian communications group had been extended.

The rand traded at R7.6865 to the greenback while it was at R12.100 to the euro and it cost ¥13.945 to buy a rand.

The euro traded about even in relation to the yen at ¥168.5918 to the shared currency while the pound gained on the euro to 79.52p.