Dollar Index Holds at 99, Weakens After US-Iran Ceasefire News
The dollar index hovered around 99 on Friday (May 29), holding steady after weakening in the previous session. This weakening occurred as reports of a tentative peace deal between the US and Iran helped improve risk sentiment and ease inflation concerns.
Washington and Tehran were reportedly preparing to extend the ceasefire for 60 days and begin negotiations on Iran's nuclear program, while considering unrestricted shipping through the Strait of Hormuz. However, the same report stated that President Donald Trump has not yet agreed to the proposed terms.
On the data front, the latest release of the US PCE price index showed lower-than-expected inflation. The combination of easing energy risks and softer inflation helped ease concerns that the recent "energy shock" would worsen the inflation outlook and trigger further interest rate hikes.
However, the market still expects the Fed to keep interest rates unchanged well into next year. The dollar's future direction will be sensitive to the certainty of the details of the US-Iran deal, developments related to the Strait of Hormuz, and the consistency of inflation data and monetary policy expectations. (asd)
Source: Newsmaker.id
