The Japanese yen declined in Asian trading on Tuesday against a basket of major and minor currencies, resuming losses that had paused temporarily yesterday against the US dollar and moving closer once again to two-month lows, as renewed demand for the US currency as a preferred alternative investment emerged amid fading hopes for a near-term end to the Iran war.

Despite speculation that inflationary pressures on policymakers at the Bank of Japan could accelerate, expectations for a Japanese interest rate hike before September remain weak, as investors await additional data on developments in the world’s fourth-largest economy.

Price Overview

Japanese yen exchange rate today: the US dollar rose 0.2% against the yen to ¥157.96, up from the opening level of ¥157.655, after touching a session low of ¥157.52.

The yen ended Monday’s trading up 0.1% against the dollar, its first gain in the past three days, supported by buying from lower levels after earlier hitting a two-month low of ¥158.90 during the session.

US Dollar

The dollar index rose about 0.15% on Tuesday, resuming gains that had paused over the previous two sessions during corrective trading and profit-taking from a four-month high, reflecting renewed strength of the US currency against a basket of global peers.

US President Donald Trump said Monday that the war will continue until Iran is decisively defeated, though it could end soon. Iran’s Revolutionary Guard dismissed the remarks as nonsense and vowed to halt oil exports from the Middle East.

Juan Perez, director of trading at Monex USA, said: “Ultimately, the US dollar is always a good safe-haven option in a troubled world.” He added: “It also tends to gain whenever the United States demonstrates any kind of military strength.”

Japanese interest rates

Pricing for a quarter-point interest rate hike by the Bank of Japan at the March meeting remains steady at 5%, while the probability of a quarter-point increase at the April meeting stands at 35%.

In the latest Reuters poll, the Bank of Japan is expected to raise interest rates to 1% by September.

Analysts at Morgan Stanley and MUFG wrote in a joint research report that they had already considered the probability of rate hikes in March or April to be low, but the growing uncertainty surrounding developments in the Middle East may prompt the Bank of Japan to adopt an even more cautious stance, further reducing the likelihood of near-term tightening.

Investors are awaiting additional data on inflation, unemployment, and wages in Japan to reassess these expectations.

US stock indices rose during Monday’s trading, erasing the sharp losses recorded earlier in the session, as the war in the Middle East and the resulting surge in oil prices revived concerns about inflationary pressures.

Observers believe that the sharp rise in oil prices caused by the war in the Middle East between the United States and Iran is bringing back memories of the stagflation crisis that occurred in the 1970s.

Stagflation refers to a situation in which the US economy falls into contraction and noticeably slower growth while inflation continues to rise, a scenario considered among the worst possible outcomes for any economy.

Several Federal Reserve officials have also begun sounding the alarm about monetary policy and the difficult position facing the central bank amid rising energy-driven inflation.

However, US President Donald Trump poured water on the fire today in remarks to a CBS News correspondent, saying the war against Iran may be nearing its end.

He stated: “I think the war is largely complete.” He added: “They have no navy, no communications, and no air force.”

Following these comments, along with calls from the International Energy Agency to release emergency oil reserves to address the crisis, oil prices declined broadly below the $90 level after approaching $120 earlier in Monday’s trading.

By the close of the session, the Dow Jones Industrial Average rose 0.5% (239 points) to 47,741 points, recording a session high of 47,876 and a low of 46,615.

The broader S&P 500 index climbed 0.7% (56 points) to 6,796 points, reaching a high of 6,810 and a low of 6,636.

The Nasdaq index advanced 1.4% (308 points) to 22,696 points, with a session high of 22,741 and a low of 22,062.

When oil reached $55 per barrel in late 2025, drilling and completion activity across the industry had already slowed sharply. A few months later, the war in Iran erupted, pushing West Texas Intermediate (WTI) crude above $100. Normally, that price level would signal a major surge in drilling activity. But that is not what industry insiders are seeing.

Rising oil prices are dominating headlines and political debates, yet they are largely absent from conversations with exploration and production (E&P) companies and oilfield service providers.

On the ninth day of Operation “Epic Rage,” a discussion with a chemical supplier—who also owns a hydraulic fracturing company in Appalachia and an E&P company in the Powder River Basin—did not even mention the war. The same was true in conversations with another operator, a fracking operations manager, a drilling manager, the chief financial officer, the controller, the land manager, and even the office manager.

No one, according to the author, is talking much about the recent price surge, let alone celebrating it. Aside from briefly mentioning the need for hedging, most reactions amount to a shrug and a simple attitude: “Let’s benefit from it while we can.”

Such a muted reaction may surprise observers outside the industry, but it feels normal to those within it. After years of extreme price swings, the industry has grown cautious. It is also widely assumed that when the war ends, the supply-demand picture will look only slightly different, even if attacks on energy infrastructure temporarily disrupt production. That alone is not enough to justify restarting drilling rigs that were recently shut down.

Geopolitical risks are as common in drilling as dry wells or mechanical failures. While the war premium in oil prices matters, it is not sufficient to build an entire development program around it.

In April 2020, the industry endured the COVID-19 crisis, a miserable fracking market, and a storage crisis that pushed WTI prices to negative $37 per barrel. Two years later, in March 2022, oil reached a decade-high near $130 after Russia invaded Ukraine. Over the following nine months, North America added roughly 100 drilling rigs until early 2023, when the count began declining again—a downward trend that has continued since.

If oil approached $120 per barrel, industry discussions might become more serious. More importantly, if prices remained in the high-$70 range for several months, activity would likely increase. But with idle rigs and empty fracturing schedules today, companies need something more substantial—something closer to certainty.

Short-term profits driven by war are expected to fade, and everyone knows it. It would not be surprising either if the Donald Trump administration imposed some form of price controls, similar to policies used in earlier eras for oil and airline tickets.

For now, nothing has changed on the ground. There has been no increase in requests for proposals (RFPs), and operators are not calling to reserve slots in fracking schedules. Even missile strikes have not broken the stagnation currently affecting the oil market.

In the oilfield services sector, times like this are marked by waiting and watching. No one wants to commit effort prematurely. Perhaps later—but not yet.

According to the article’s analyst, two triggers would need to occur before activity truly accelerates:

A shift in the global supply-demand balance.

A prolonged war—which in reality may represent the same factor.

At present, the only force capable of significantly altering the supply-demand balance would be a long war. But that would take time, and it is doubtful voters would tolerate a sustained bombing campaign lasting months.

The extra cash generated during nine days of conflict will likely go toward completing some previously drilled but uncompleted wells (DUCs). More likely, however, the money will be distributed to shareholders rather than spent on oilfield services. Capital providers are also unlikely to release new funding anytime soon, and the forward oil price curve has not changed significantly.

Like many searching for better opportunities, the author attended this year’s NAPE conference—a marketplace where capital meets investment opportunities. His E&P company did not host a booth, though many friends marketing deals did.

What stood out most was the clear divide between those with capital and those without it. Opportunity seekers resembled unwanted students at a school dance, standing quietly in the dusty corners of the hall. Meanwhile, the “cool kids” were the capital providers: private equity firms with large booths filled with couches and lounge chairs, alongside banks, brokers, and private capital providers.

Then there are the stories about connections with family offices—those “unicorns” everyone hears about but rarely encounters.

Deals may still be made, often through networking and pre-arranged meetings. But the structure of those deals follows what insiders call the “golden rule”: whoever has the gold makes the rules.

If oil stabilized around $90 for an extended period, the situation would reverse. Opportunity owners would be the ones with the comfortable booths and coffee bars. But that is not the reality today.

Even with rising prices, bearish traders will likely wait for the final missile to fall before immediately pushing prices lower again. Only a major supply disruption—such as the destruction of oil infrastructure or sabotage like the burning Kuwaiti oil wells during the 1991 Gulf War—would significantly change the equation.

Otherwise, the market will eventually return to pricing the marginal barrel, recently estimated around $50 per barrel. That level is undesirable because it is too low and fuels extreme cyclical volatility.

But oil at $90 is also too high to build a stable business around. For that reason—and because capital still dictates the rules—E&P companies will remain cautious while service firms continue to struggle until market forces rebalance supply and demand through consumption rather than war.

The Canadian dollar slipped on Monday from a level close to its highest point in nearly a month against the US dollar, but it continued to post gains against some other G10 currencies as the surge in oil prices driven by the war in the Middle East influenced investor sentiment.

The Canadian currency, known as the “loonie,” fell 0.1% to C$1.3585 per US dollar, or 73.61 US cents, after touching its strongest level since February 11 at C$1.3523 earlier in the session. Meanwhile, the Canadian dollar rose 0.2% against the euro.

Mark Chandler, chief market strategist at Bannockburn Global Forex, said: “Many people see the strength of the Canadian dollar and its relative performance and link that to higher oil prices.”

He added: “But the more durable long-term relationship is that when the US dollar is strong, Canada behaves like a proxy for it. When the US dollar rises, the Canadian dollar tends to rise against other currencies as well.”

The US dollar, considered a safe-haven asset, gained against a basket of major currencies, while stocks on Wall Street declined amid concerns that a prolonged conflict in the Middle East could disrupt global energy supplies and weigh on economic growth.

Both the United States and Canada are major oil producers, and crude prices climbed to nearly a four-year high of $119.48 per barrel before easing slightly later.

Canadian trade data for January is scheduled for release on Thursday, while the February employment report will be published at the end of the week. However, the impact of these data on the Bank of Canada’s interest rate decision expected next week may be limited.

Chandler said: “I fear the war has made all economic data stale or less relevant.”

Data released Friday by the US Commodity Futures Trading Commission showed that speculators reduced bullish bets on the Canadian dollar, with net non-commercial long positions falling to 21,050 contracts as of March 3, down from 27,578 the previous week.

In Canada’s bond market, yields were mixed along a flatter curve, with the two-year yield rising 3.8 basis points to 2.674%, while the 10-year yield fell 1.5 basis points to 3.399%.