Dollar Steady Amid Fed Rate Hike Prospects and Iran Tensions
The US dollar held steady on Thursday (May 21) after Fed comments indicated more policymakers support an interest rate hike. This hawkish outlook, combined with uncertainty over the Iran conflict, weighed on other currencies, particularly the Australian dollar, which weakened after disappointing jobs data.
The dollar index and its futures rose about 0.1%, remaining near a six-week high. The minutes of the Fed's late April meeting showed most officials were open to "policy tightening" if inflation remained above the 2% target, with inflationary pressures primarily stemming from energy costs due to supply disruptions related to the US-Israel war in Iran.
The Australian dollar weakened 0.5% as unemployment rose to a 4.5-year high, lowering expectations for a Reserve Bank of Australia interest rate hike in June. The euro and pound were relatively flat, although the pound strengthened earlier after UK inflation data showed a higher-than-expected increase. The euro erased losses despite data showing business activity in the eurozone contracted at its fastest pace in 2.5 years.
The Japanese yen stabilized after better-than-expected April trade data, supported by exports to the US and China, as well as manufacturing and services growth according to the preliminary May PMI.
Variables to monitor: the Fed's interest rate decision, developments in negotiations and tensions in Iran, and key economic data from the US, Japan, and Australia. (arl)*
Source: Newsmaker.id
