Dollar Strengthens, Hormuz Triggers Risk-Off
The US dollar strengthened on Tuesday (July 7th) as demand for safe-haven assets increased. Market sentiment returned to caution after oil prices rose due to new attacks on ships in the Strait of Hormuz.
The Bloomberg Dollar Spot Index rose 0.2% after weakening for three consecutive days. The dollar strengthened after three ships were reportedly attacked in the Strait of Hormuz, reviving concerns about shipping security and the stability of global energy supplies.
Inflationary pressures are also a concern. The New York Fed Survey of Consumer Expectations showed one-year inflation expectations rose to 3.67% in June, from 3.46% the previous month. According to Bank of America analyst Alex Cohen, rising inflation expectations and oil prices also supported the US dollar.
In Japan, USD/JPY moved relatively stable around 162.06. The yen briefly gained support after Japan's Minister for Growth Strategy, Minoru Kiuchi, denied reports that the government was pushing for low interest rates as part of its fiscal expansionary policy. Japanese wage data, which rebounded in May, also reinforced the view that the Bank of Japan still has room to raise interest rates.
Meanwhile, NZD/USD fell 0.4% to 0.5681 ahead of the Reserve Bank of New Zealand's interest rate decision. Most economists expect the RBNZ to raise rates by 25 basis points to 2.50%. If this happens, the New Zealand dollar could potentially receive a short-term boost.
Elsewhere, USD/CAD fell slightly to 1.4199 after Canada's trade surplus widened to its largest in four years, supported by the energy, metals, and minerals sectors. Meanwhile, EUR/USD weakened 0.2% to 1.1415, with the market also monitoring political developments in France after Marine Le Pen continued her plan to run for president despite facing a legal ruling. (arl)
Source: Newsmaker.id
