Dollar Strengthens as Oil Tops $103 Amid Central Bank Caution

The US dollar strengthened as Brent crude rose to $103.3 early Tuesday, with sterling slipping to $1.3280 and the euro easing to $1.1480. The Australian dollar fell to $0.7057 despite a rate hike after a split Reserve Bank of Australia vote. Gold edged higher to $5014. Asian equities moved modestly higher, while S&P 500 futures dipped and European futures held steady amid uncertainty over central bank responses.

Equities

The FTSE 100 closed higher on Monday, rising 0.6% by the end of the session as easing oil prices supported sentiment across London markets. The index was steady earlier in the day before gains picked up into the close, helped by a pullback in crude after signals that some shipping through the Strait of Hormuz could resume. The FTSE 250 fell 0.2%, marking a fourth consecutive daily decline.

Among UK-listed companies, energy majors BP and Shell both closed more than 1% higher on Monday, even as oil prices softened during the session. Gains were supported by continued focus on supply risks and elevated crude levels more broadly. Property stocks also moved higher after a broker upgrade, with Segro rising 2.8% and Hammerson climbing 4.1% following a rating change from Morgan Stanley. In financials, Close Brothers dropped sharply, falling 13.9% after short seller Viceroy Research disclosed a position against the firm. Elsewhere, financial and consumer staples sectors both ended more than 1% higher. Data released on Monday showed UK consumer confidence has fallen to its lowest level since early last year, adding to focus on the Bank of England’s upcoming rate decision.

In the United States, Wall Street closed higher late on Monday, with the S&P 500 rising 1.01%, the Nasdaq gaining 1.22% and the Dow Jones Industrial Average advancing 0.83%. Technology stocks led gains, particularly those linked to artificial intelligence. Meta Platforms rose 2.3% after reports it is planning to cut at least 20% of its workforce as part of efforts to manage costs tied to AI investment. Nvidia added 1.6% after unveiling new components at its developer conference, while Taiwan’s Foxconn issued a strong revenue outlook tied to demand for AI servers.

Other chip-related names also moved higher, with Micron Technology climbing 3.7% after announcing plans for a second manufacturing facility in Taiwan. Tesla rose 1.1% after Elon Musk said its Terafab AI chip project would launch within days. Outside technology, Dollar Tree jumped 6.4% after indicating it could benefit from tariff changes, while Strategy Inc gained 5.6% alongside a rise in bitcoin prices. Travel-related stocks also advanced, with Delta Air Lines up 3.5% and Norwegian Cruise Line rising 5.1% as oil prices eased late in the session.

Forex & Commodities

The US dollar strengthened early on Tuesday, trading with a firmer tone as geopolitical tensions in the Middle East continued to influence currency markets. The euro slipped to $1.1480, while sterling weakened to $1.3280, both moving lower against the dollar during the European morning. The dollar index edged higher, extending gains seen since late February.

The Japanese yen remained under pressure, hovering near ¥159.4 per dollar, close to levels that have previously drawn attention from Japanese authorities. Meanwhile, the Australian dollar was volatile following the Reserve Bank of Australia’s decision to raise its cash rate to 4.10%. Despite the rate increase, the currency dipped to around $0.7057 after the central bank revealed a narrowly split vote and highlighted ongoing inflation risks.

Spot gold rose modestly in early trading to $5014 per ounce, supported by continued uncertainty but capped by expectations that major central banks will keep policy relatively tight. Investors are closely watching upcoming decisions from the Federal Reserve, Bank of England and European Central Bank, all due later this week, with no immediate rate changes expected but guidance in focus.

Oil prices rebounded early on Tuesday, with Brent crude climbing to $103.3 per barrel and US West Texas Intermediate reaching $96.85. Supply concerns persist as disruptions in the Strait of Hormuz continue to limit flows, with some producers cutting output. Energy markets remain sensitive to developments in the region, particularly following reports of infrastructure incidents and constrained shipping routes.