DXY Holds at 99, Strong Geopolitics and Nonfarm Payrolls Hold Back Dollar
The US Dollar Index (DXY) moved flat around 99 during the Asian session on Monday (June 8), holding near its monthly high. The dollar remained supported by two main factors: escalating tensions in the Middle East, which fueled demand for safe-haven assets, and shifting interest rate expectations following strong US employment data.
The geopolitical situation escalated after Israel announced it had struck military targets in Iran, hours after Iran launched missiles into Israeli territory. Media reports reported explosions were heard in several Iranian cities. At the same time, US President Donald Trump's statement that he wanted to contain escalation was not enough to ease market caution. This condition kept the dollar attractive as a short-term safe haven.
From a macro perspective, the May Nonfarm Payrolls (NFP) report reinforced the view that the US labor market remains solid. NFP was recorded at +172,000, and the April figure was revised upward to 179,000, while the unemployment rate remained at 4.3%. This combination has led investors to believe the Fed will increasingly focus on inflation risks, especially as price pressures remain sensitive to energy fluctuations.
Following the strong data, the market has re-increased bets on an interest rate hike. The probability of a December rate hike has increased compared to last week, according to the FedWatch benchmark, reflecting a more hawkish repricing. Some economists also believe the combination of a strengthening labor market and an energy shock makes policy tightening increasingly likely if inflation persists.
Going forward, the dollar's direction will remain heavily influenced by two channels: Middle Eastern headlines, which can quickly shift risk sentiment, and US data, which determines how far the market pushes the "tighter for longer" scenario. As long as geopolitical uncertainty is high and US domestic data remains solid, the dollar's room for weakness is likely to be limited. (asd)*
Source: Newsmaker.id
