Dollar Strengthens Slightly Ahead of PCE, Iran Risks Support
The US dollar edged higher ahead of the release of a series of US economic data, including Personal Consumption Expenditures (PCE)—the Fed's most frequently used inflation indicator. In addition to data factors, rising geopolitical risks in the Middle East also boosted demand for safe-haven assets and supported the greenback.
The Bloomberg Dollar Spot Index rose 0.1%, extending its gains to a fifth consecutive day. Meanwhile, the New Zealand dollar weakened after central bank Governor Anna Breman stated that the economy still has room to recover this year without triggering excessive inflation—a signal that the RBNZ may not need to tighten policy further.
According to Richard Franulovich (Westpac), the combination of recent improving US data (including overnight jobless claims), more cautious signals from the Fed, and US-Iran tensions have given the dollar a boost this week. However, he believes the dollar still has structural weaknesses, so long-term investors such as pension funds may continue to sell when the dollar strengthens.
Major currency movements: NZD/USD fell 0.3% to 0.5955, AUD/USD fell 0.2% to 0.7041. Meanwhile, USD/JPY rose 0.2% to 155.31, and EUR/USD fell 0.2% to 1.1752.
In the bond market, US Treasuries remained relatively stable. The 10-year US yield held around 4.07%, indicating the market is still "waiting for direction" ahead of PCE data and subsequent catalysts.
Source: Newsmaker.id
