Commerzbank: US Dollar Strength Not Driven by Safe-Haven Demand

According to ChainCatcher, Commerzbank analyst Thu Lan Nguyen pointed out in a report that the recent appreciation of the US dollar amid the Israel-Iran conflict may be mainly driven by the rebound in oil prices, rather than its role as a safe-haven currency. The US dollar benefits from rising oil prices because this improves the ratio of export to import prices, that is, the US terms of trade. Thanks to technological breakthroughs from the shale oil revolution, the United States has now become one of the world’s largest crude oil producers.

It is worth noting that the US dollar did not show broad-based strength last Friday; instead, it fell against the Canadian dollar and Norwegian krone, both of which are more dependent on oil economies. The analyst emphasized that this phenomenon precisely explains why, as oil prices gave back part of last Friday’s gains, the US dollar index also pulled back accordingly.