USD Moves Steady Amid Iran-US Uncertainty
The US dollar moved steadily in Monday's trading after registering a slight weakening last week. Market participants are still awaiting developments in Middle East peace talks and the US jobs data due later this week, which could potentially influence the direction of the Federal Reserve's interest rate policy.
The US dollar index hovered around 99.02, relatively unchanged after falling 0.4% the previous week. The weakening was triggered by expectations that the United States and Iran were getting closer to an agreement to reopen the Strait of Hormuz. However, the lack of new developments and the re-escalation of tensions between the US and Iran have led the foreign exchange market to adopt a wait-and-see attitude.
Previously, the dollar had strengthened at the start of the conflict due to increased demand for safe-haven assets. However, that strength has begun to erode due to uncertainty over the direction of the conflict and its impact on energy inflation. If the Strait of Hormuz is reopened and oil prices fall, the dollar could weaken in the short term, while risk-based currencies could regain support.
This week's market focus is also on the US jobs data scheduled for release on June 5. The data is expected to show the unemployment rate remaining at 4.3% with an additional 85,000 jobs. Meanwhile, the Japanese yen weakened to around 159.45 per dollar, approaching the psychological level of 160, which previously triggered Japanese authorities' intervention. The market is also awaiting a speech by Bank of Japan Governor Kazuo Ueda to gauge the likelihood of an interest rate hike next week.
Main causes:
The dollar held steady as the market awaited clarity on the Iran-US conflict, developments on the reopening of the Strait of Hormuz, and US employment data. High oil prices also reinforced expectations that the Fed could maintain a tight policy or even raise interest rates if inflationary pressures re-escalate.
Things to watch:
The market's primary focus this week will be on the June 5 US employment data, comments from Fed officials, oil price movements, and the USD/JPY level around 160. If the yen continues to weaken, the risk of intervention by Japanese authorities could again become a major market concern.
Source: Newsmaker.id
