Dollar Consolidates After Two-Day Rally as Markets Watch US Data and Middle East Risk
The US dollar entered a consolidation phase early Wednesday (March 4) after outperforming major peers for two consecutive sessions. Attention turns to the ADP Employment Change for February and the ISM Services PMI for February, while risk sentiment remains fragile amid a deepening Middle East crisis.
The US Dollar Index (DXY) edged slightly lower around 99.00 in the European morning after rising nearly 1.5% over the first two days of the week. US equity index futures were down about 0.3% to 0.4% after Wall Street closed sharply lower on Tuesday.
In energy markets, crude extended gains after jumping more than 5% on Tuesday, driven by uncertainty around the Strait of Hormuz. US President Donald Trump said late Tuesday the US navy would provide insurance to ships in the Gulf after Iran largely succeeded in shutting down Hormuz, adding that US forces could escort vessels through the strait if needed. Iran’s Revolutionary Guards, however, said on Wednesday they still retain control of the Strait of Hormuz. West Texas Intermediate (WTI) was trading near $76.50 a barrel, up more than 2% on the day.
USD/JPY pulled back below 157.50 after two straight days of gains. Japan’s Finance Minister Satsuki Katayama said authorities were closely watching market developments and were prepared to take various measures if necessary. Bank of Japan Governor Kazuo Ueda warned that Middle East developments could materially affect the global and Japanese economies via energy prices, noting that higher oil prices would worsen Japan’s terms of trade, weigh on growth, and influence underlying inflation.
In Europe, EUR/USD extended its weekly slide to its lowest level since late November below 1.1550 on Tuesday before correcting higher to hold above 1.1600 in Wednesday’s European morning. The Australian dollar found support from stronger-than-expected growth data: Australia’s GDP expanded at an annualized 2.6% in Q4, up from 2.1% in the previous quarter and above the 2.2% market forecast. AUD/USD held steady above 0.7000 after falling about 0.8% on Tuesday. GBP/USD stabilized around 1.3350 following a two-day decline.
Source : Newsmaker.id
