Dollar near week-high as US and Iran trade strikes

The US dollar held around its highest level in a week in Asian trade on Wednesday as the US and Iran traded fresh attacks, while New Zealand's currency jumped after the country's central bank lifted interest rates and flagged further tightening. 

The greenback firmed 0.1 percent to 162.33 yen, advancing for a fourth day against the Japanese currency to reach its strongest level since July 2.

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On Wednesday, Iran's Revolutionary Guards said they attacked US military sites in Bahrain and Kuwait after the US launched a wave of strikes against Iran in response to attacks on tankers in the Strait of Hormuz.

The greenback, widely considered a global safe haven, pared some earlier gains as the trading session progressed.

"For now, the market is keeping to the playbook that Tehran and Washington are still in a high-stakes game to gain leverage during the temporary truce, and that Tuesday’s incident would not descend back into a full-scale war," DBS analysts wrote in a research report. 

"However, the incident was a reminder that the real risk remains the expiry of the interim ceasefire agreement in mid-August and the red line over transit fees in the Strait of Hormuz."