Dollar Holds Firm After Earlier Strengthening
The dollar index held around 98.5 on Tuesday (May 5) after strengthening in the previous session, supported by demand for safe-haven assets following the escalation of violence in the Middle East that threatened to derail a four-week ceasefire between the US and Iran.
Recent developments included US forces repelling an Iranian attack while escorting two US-flagged vessels through the Strait of Hormuz, while the United Arab Emirates reported successfully intercepting an Iranian-launched cruise missile. UAE authorities also linked a major fire at the port of Fujairah to a drone attack.
The dollar's rise came as oil prices strengthened and Treasury yields rose, in line with growing concerns that an energy surge could add to inflationary pressures and ultimately fuel expectations of tighter Fed policy. This transmission channel typically operates through rising oil prices, which amplify inflation risks, lift yields, and then support the dollar through yield differentials and safe-haven flows.
Market participants now await speeches by Fed officials and the release of key economic data, including the monthly employment report. Consensus estimates suggest the US economy added around 60,000 jobs in April, a sharp slowdown from the 178,000 increase in March—a figure that could potentially influence the market's assessment of the balance between inflation risks and slowing growth. (asd)
Source: Newsmaker.id
