Dollar Falls Slightly, Markets Eye Hormuz and Yen Intervention Signals
The US dollar weakened slightly on Tuesday (May 5) as market participants weighed developments in the Iran war and the risk of disruption in the Strait of Hormuz. The dollar index (DXY) fell 0.1% to 98.05 after rising 0.3% the previous day. The euro strengthened 0.1% to US$1.17005, while the pound rose 0.2% to US$1.35576.
Sentiment remained headline-driven after US Defense Secretary Pete Hegseth said the ceasefire with Iran was "not over," amid reports of a firefight in the Gulf over control of Hormuz. The US military said two US merchant ships passed through the strait with the support of guided-missile destroyers, but Iran denied the voyage.
Against the yen, the dollar rose 0.3% to 157.785, while markets remained wary of potential further Japanese intervention following last week's alleged actions that reportedly cost around US$35 billion. Structural pressures on the yen are considered to remain significant, from interest rate differentials to the impact of energy shocks.
Data-wise, the US trade deficit widened in March due to a surge in imports related to the AI investment boom, although exports were helped by oil shipments amid the conflict. In the G10, the Australian dollar strengthened 0.2% to US$0.7181 after the Reserve Bank of Australia (RBA) raised interest rates for the third consecutive time, while raising its inflation projections and lowering its growth and employment outlook due to the global energy shock.
Going forward, the market is likely to remain sensitive to developments in Hormuz, signals of yen intervention, and the direction of central bank policy, which is increasingly influenced by the risk of energy inflation. (Arl)*
Source: Newsmaker.id
