Dollar Gains Slightly, Markets Eye Hormuz and Fed Maneuvers
The US dollar index rebounded slightly on Wednesday (April 22), supported by safe-haven demand following escalating tensions in the Strait of Hormuz following Iranian attacks on ships, although the extension of the US-Iran ceasefire provided some relief to the market. At 3:15 p.m. ET, the DXY rose 0.2% to 98.59.
The dollar surged in March as investors viewed the US as a major energy exporter as more insulated from supply shocks caused by the Hormuz disruption, and as expectations of "higher for longer" interest rates also strengthened. However, the greenback is now back near pre-war levels as some analysts believe the peak of geopolitical turmoil may have passed, although the risks remain.
Trump on Tuesday extended the two-week ceasefire, originally set to expire Wednesday, until Iran can develop a "unified" negotiating proposal. However, Iran has not yet announced its official position on the extension, and state media reported that Tehran has decided not to participate in the new round of talks with the US. Tensions on the ground remain high after reports of at least three ships being attacked by the IRGC near Hormuz.
The dollar is also under scrutiny from the Fed's dynamics following the hearing of Kevin Warsh, Trump's nominee to replace Jerome Powell, who reiterated his commitment to not cut interest rates and emphasized the central bank's independence. However, the Senate's approval timeline remains uncertain amid political signals in Congress.
In other major currencies, EUR/USD fell 0.3% to US$1.1708 as eurozone consumer confidence weakened, while GBP/USD remained flat at US$1.3506 amid the impact of the oil surge on UK headline inflation, which was greater than core inflation. (Arl)*
Source: Newsmaker.id
