Dollar firm as war expands in Middle East By Reuters

SYDNEY (Reuters) – The dollar had its strongest gain in a week on Wednesday after an Iranian missile attack on Israel prompted buying of safe-haven assets as investors worried about the widening conflict in the Middle East.

Early moves in Asia were light, leaving the euro below $1.10 after its biggest drop in nearly four months overnight.

The safety bid kept the yen broadly flat at 143.45 per dollar and the Swiss franc at 0.8463 per dollar. The New Zealand dollar fell 1.1% overnight to $0.6283 and oil prices rose 2.5%.

Up about 0.5 percent overnight to 101.2, its biggest gain since Sept. 25, which was also helped by a stronger-than-expected reading on U.S. job openings.

Israel said Iran had launched more than 180 ballistic missiles, and Iran’s Revolutionary Guard Corps said the attack was in retaliation for the killing of Israeli militant leaders and aggression in Lebanon against the Iran-backed Hezbollah armed movement.

No injuries were reported in Israel. Iran previously struck Israel in April without causing major damage or a lasting reaction in financial markets. However, the start of an Israeli ground attack against Hezbollah inside Lebanon and Israel’s vow to respond opens the possibility of escalation.

Markets’ response is focused on oil prices, with ANZ analysts noting that further moves will likely be determined by Israel’s response and whether it attacks Iran’s military or oil industry.

Sentiment pushed the Australian dollar down to $0.6883, although losses were capped by some upbeat retail sales data on Tuesday. Sterling was down 0.7% overnight and held at $1.3278 in early Asian trade.

Westpac strategist Imre Speizer said the Middle East was unpredictable but that, absent an escalation, market sentiment could recover and focus on the economy.

In New Zealand, a business survey showing a rapid cooling of price pressures raised the odds that New Zealand’s central bank will cut rates by 50 basis points next week. Westpac and the BNZ revised their forecasts to expect a 50bp cut and markets priced in about a 77% chance of a 50bp cut.

Later in the day, Democrat Tim Walz and Republican JD (NASDAQ: ) Vance go head-to-head in a vice presidential debate, and US private payrolls data is available.

Traders are also wary of a labor dispute on the US dock.

Port workers on the East and Gulf Coasts began their first full-scale strike in nearly 50 years on Tuesday, halting the flow of about half of the country’s shipping.