Dollar Steady Amid US Inflation and Iran Tensions
The US dollar exchange rate remained relatively flat on Wednesday (June 10, 2026) following the release of inflation data that met market expectations. The dollar index, which measures the greenback's strength against six major currencies, held at 99.90, remaining near a two-month high reached earlier this week. Although core inflation and headline CPI were slightly lower than expected, safe-haven demand remained high due to escalating tensions between Washington and Tehran.
Official data showed that US CPI rose 0.5% month-on-month in May, while annual CPI rose 4.2%, in line with economists' forecasts. Core inflation, which excludes food and energy, rose only 0.2% month-on-month and 2.9% year-on-year, lower than the 0.3% monthly estimate. This data provided some relief from expectations of a sudden interest rate hike by the Fed, but the market still believes inflationary pressures remain high.
The dollar's strengthening sentiment was also supported by a stronger-than-expected US jobs report. Solid employment growth reduced the likelihood of a Fed rate cut in the near future, keeping investors long on the dollar. USD/JPY even broke through the psychological level of 160, while pressure mounted on other major currencies, such as USD/CAD.
Geopolitical tensions also held back the strengthening of other currencies. Iran launched attacks on US military bases in Jordan and several Gulf countries in retaliation for US attacks near the Strait of Hormuz. This escalation followed temporary market optimism the previous day after Iran and Israel signaled a pause in attacks. The surge in conflict risks strengthened demand for safe-haven assets, including the US dollar.
Furthermore, the market is also monitoring the Bank of Japan's (BoJ) move, which is expected to raise its benchmark interest rate from 0.75% to 1% at its mid-June policy meeting. Japanese producer inflation data rose 6.3% year-on-year in May, exceeding expectations, adding to expectations of monetary policy normalization in Tokyo. These global and domestic factors have kept the dollar stable, while other Asian currencies have seen limited movement.
Source: newsmaker.id
