US Dollar Strengthens, Hormuz in the Spotlight
The US Dollar Index (DXY), which measures the strength of the US dollar against six major global currencies, maintained its gains during Tuesday's European trading session. The DXY hovered around 100.90 after remaining flat for the previous two days. The dollar's strengthening was supported by increased demand for safe-haven assets amid renewed geopolitical tensions.
Tensions resurfaced in the Strait of Hormuz after reports that Iran fired at least two missiles at commercial vessels transiting the strategic waterway on Monday night. Two vessels reportedly sustained significant damage, but there were no casualties.
Separately, the UK Maritime Trade Operations (UKMTO) also confirmed that a tanker traveling south was hit by an unidentified projectile on its port side. The attack sparked a fire on board and further highlighted security risks in one of the world's most important energy routes.
However, the room for the US dollar to strengthen may remain limited. Markets are beginning to reduce expectations of a Federal Reserve interest rate hike this month and in September. This shift in sentiment occurred after the US labor report showed job gains in April, May, and June were lower than Wall Street forecasts.
Furthermore, US service sector activity also slowed slightly. The June ISM Services PMI fell to 54.0 from 54.5, in line with market expectations. Despite the decline, this figure remains above 50, indicating the US service sector remains in an expansionary phase.
Among the report's components, the price index fell from 71.3 to 67.7, indicating that price pressures are easing. Meanwhile, the employment index improved quite strongly from 47.9 to 51.2, exiting the contraction zone. The US dollar also received underlying support from hawkish comments from Fed Governor Christopher Waller and relatively resilient US domestic economic data.
Source: Newsmaker.id
