Dollar Steady as US-Iran Conflict Keeps Markets on Edge; Sterling Edges Higher

The U.S. dollar was broadly steady on Monday as investors remained cautious amid escalating conflict between the United States and Iran, while sterling nudged higher ahead of a change in British leadership. Brent crude futures gave up earlier gains after briefly topping $90 per barrel.

Dollar Index Holds Steady Amid Middle East Tensions

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was little changed at 100.78. Iran's Revolutionary Guards said they had struck U.S. military assets across the Middle East following another night of U.S. bombardment of Iranian cities. The conflict has disrupted energy supplies and heightened concerns about global inflation.

Nick Rees, Head of Macro Research at Monex Europe, said markets had become more comfortable with the current range of risks. He noted that unless unexpected developments occur, significant volatility is unlikely, although investors are expected to remain cautious. Rees added that markets could return to the lower-volatility environment seen in May, reflecting a lack of strong conviction about the future direction of asset prices.

Brent Crude Pares Gains After Topping $90

Brent crude futures were last trading slightly higher at $88.43 per barrel after rising above the $90 mark earlier in the trading session. The retreat from the intraday high suggests traders are weighing the risk of further supply disruptions against the possibility of diplomatic de-escalation.

Sterling Inches Higher as Political Transition Looms

Sterling edged higher as markets prepared for the arrival of Britain's new Prime Minister, Andy Burnham. The currency's modest gain reflects cautious optimism about the incoming administration's economic agenda, though domestic political uncertainty remains in focus.

For Nigerian businesses and importers, the dollar's steadiness offers a temporary breather after weeks of volatility in the parallel market. However, the risk of a sharp spike in oil prices remains the biggest wildcard. If Brent crude breaks sustainably above $90, Nigeria's import bill will rise, putting fresh pressure on the naira. Traders should watch for any surprise escalation in the Iran conflict, which could trigger a rapid dollar rally and deepen forex shortages.