Dollar Weakens While Risk Sentiment Strengthens
The US dollar weakened slightly on Wednesday, with the dollar index down 0.3% to 99.06, as rising risk sentiment dampened demand for safe havens. Market optimism stemmed from Nvidia's rise ahead of its quarterly report and President Donald Trump's comments that peace negotiations with Iran were in the "final stages." Nvidia's rise also boosted other chip stocks, reflecting growing risk appetite on Wall Street.
US Treasury yields, which had previously surged, have stabilized after the global bond selloff eased. The minutes of the April FOMC meeting showed that a majority of policymakers considered an interest rate hike likely appropriate if inflation remained elevated above the 2% target. The latest US CPI and PPI data showed a significant impact on inflation from the Iran conflict on oil prices, reinforcing expectations of monetary tightening.
Oil prices declined after Trump said negotiations with Iran were close to an agreement. Brent fell to around $109 per barrel, while WTI hovered around $102 per barrel. This news eased concerns about global supply disruptions through the Strait of Hormuz and spurred a recovery in energy markets, which had previously fueled inflation and pressure on the bond market.
The pound strengthened 0.4% to $1.3444 after UK CPI data showed annual inflation fell to 2.8%, lower than market expectations. This data gives the Bank of England room to hold interest rates, even though the labor market showed an unexpected rise in unemployment. Analysts called this data a "relief" for the BOE amid global economic uncertainty.
The Japanese yen strengthened slightly against the dollar, with USD/JPY down 0.1% to 158.83. This yen strengthening occurred after the dollar previously strengthened to levels that triggered currency market intervention by Tokyo last April, indicating market sensitivity to currency volatility amid geopolitical tensions and global interest rate expectations.
Source: Newsmaker.id
