Tensions in some of the world’s most oil-heavy countries caused problems for the US dollar on Sunday and into Monday.
Oil prices went up heavily in many areas of the commodity-producing world over the weekend after there were two key attacks on processing plants in the Middle East.
The attacks took place on two different plants, one of which was the Abqaiq plant in Saudi Arabia.
This was particularly significant given that the Abqaiq plant is the largest oil processing plant on Earth.
A rise of over 15% was spotted in some oil price measurements on Sunday, and over 5% of the world’s oil was out of action for a while.
There are some disputes over how this happened and who was responsible.
The US government has accused the Iranian government, which has been involved in previous recent issues with oil tankers, of being the perpetrators.
The Iranian government, however, claims that an associated rebel group – known as the Houthi group – committed the act.
The knock-on effect of this uncertainty for the forex market was that currencies which are deeply linked to commodity prices rose in value.
The Canadian dollar is one such currency, as it tends to export a lot of oil to foreign countries.
It was seen rising by half a percentage point in its pair with the US dollar at one stage.
Overall, it rested at 1.3224 Canadian dollars per US dollar at one point.
Another oil exporter, Norway, saw its currency go up in the same pair by even more.
The other main consequence was that the currencies which attract attention during times of risk aversion, such as the Japanese yen, were way ahead.
The yen was up by 0.3% or more in the JPY/USD pair, and reached 107.60 at one stage.
The Swiss franc, which is also known for attracting attention when risk aversion is high, went up in its pair with the dollar and saw highs of $0.9871.
The next big moment for the foreign exchange markets will be a series of interest rate-setting meetings due to happen later in the week.
The Federal Reserve will meet, and a rate cut has now largely been priced into the forex markets.
There is still no certainty over how far the Federal Open Market Committee will choose to go.
The US dollar index, which is an artificial tool designed to monitor how the greenback is performing compared to several other world currencies, was down on Monday morning by a fifth of a percentage point.
It was seen at 98.053 at one stage.
This was a far cry from its regular surges last week, which were fuelled largely by suggestions that the US and Chinese governments were about to work together to solve the ongoing trade tensions between the countries.
The Bank of Japan is also set to make its move – although the weapon of choice is likely to be fiscal stimulus rather than direct rate cuts.
According to a poll published by Reuters, a third or so of experts asked said that they believed the Bank would opt for further stimulus.