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- USD/CNH climbs as rising Middle East tensions drive investors toward the US Dollar as a safe-haven asset.
- Iran told Houthi rebels to block the Red Sea oil route if the US attacks Iranian infrastructure.
- Economists and an adviser say China can stabilize growth by fast-tracking already-budgeted national infrastructure projects this year.
USD/CNH gains ground for the second successive day, trading around 6.7760 during the Asian hours on Friday. The pair appreciates as the US Dollar (USD) receives support from escalating developments surrounding conflicts in the Middle East.
Reuters reported on Thursday that Iran has instructed Yemen’s Houthi militia to stand ready to close the critical Red Sea oil route if the United States strikes Iranian power infrastructure, presenting a potent new threat to global energy supplies. Amplifying these concerns, the Tasnim news agency reported explosions in Bandar Abbas, Qeshm, and Ahvaz, while very loud explosions were also heard in Kuwait and as far away as Basra.
These geopolitical flare-ups follow threats made earlier this week by US President Donald Trump, who stated the US would strike Iran’s bridges and power plants next week if the country does not return to the negotiating table. Ultimately, these signs of escalating tensions in the Middle East could boost safe-haven currencies like the US Dollar, potentially creating a strong tailwind for the USD/CNH pair in the near term.
China can stabilize its economic growth this year by fast-tracking already-budgeted national infrastructure projects, according to economists and a government adviser. This approach reduces the likelihood of large-scale fiscal stimulus. The strategy allows Beijing to counter an unexpected, broad decline in investment—which recent data showed has dragged down growth—while maintaining strict control over local government spending, per Reuters.
