Dollar Drops After Iran Halts Attacks on Israel
The US dollar weakened in trading on Monday (June 8th) after Iran announced it was halting its military attacks on Israel. Tehran's statement prompted investors to return to other currencies that had been under pressure from strong US jobs data last Friday.
The US Dollar Index (DXY) fell around 0.14% to 99.90, while the euro edged up to $1.1539 and the British pound strengthened slightly to $1.3362. However, the dollar retained most of its gains from the Nonfarm Payrolls report, which showed 172,000 jobs added in May, well above the 85,000 expected.
Market analysts believe the combination of strong US employment and energy supply disruptions due to the Iran war increases the likelihood of a Fed interest rate hike. Currently, the market places a roughly 50% chance of a September rate hike under new Fed Chairman Kevin Warsh.
Safe-haven currencies such as the Japanese yen weakened, although the Bank of Japan is expected to raise interest rates this month. The yen exchange rate is trading just below 160, after previously dropping to its lowest level since July 2024.
Barclays believes the prospect of a US-Iran agreement and the upcoming FOMC meeting will limit the dollar's movements in the short term. Investors now remain wary of geopolitical developments that could trigger further market volatility.
Source: Newsmaker.id
