Ahead of CPI, Dollar Steady After Trump Threatens Retaliation Against Iran
The US dollar index (DXY) moved cautiously around 99.90 on Tuesday (June 9), as market participants began to position themselves ahead of Wednesday's US CPI release. May inflation is expected to edge higher, making this data a potential key driver of the dollar's and yields' direction in the short term.
The dollar did weaken initially, but then pared its losses after President Donald Trump claimed Iran shot down a US Apache helicopter over the Strait of Hormuz and stated that the US "must respond." This escalatory tone boosted demand for safe-haven assets, reviving the dollar.
In major markets, EUR/USD held higher around 1.1550 despite the dollar's recovery, with markets also awaiting the ECB's expected interest rate hike on Thursday. GBP/USD strengthened to the 1.3390 area, capitalizing on the dollar's limited weakness, while USD/JPY held around 160.30—remaining near a sensitive area that often sparks speculation of intervention.
In Asia-Pacific, AUD/USD weakened to around 0.7030 after disappointing Westpac Consumer Confidence data in Australia, adding to domestic pressures amidst volatile global sentiment.
The next key remains the CPI: if inflation is hotter than expected, the dollar has the potential to strengthen further as markets could re-increase the probability of tighter Fed policy. If the CPI cools, the dollar could lose steam—although geopolitical headlines like Hormuz still have the potential to maintain high volatility across assets. (arl)*
Source: Newsmaker.id
