Dollar Strengthens, Trump Doubts Iran Peace
The US dollar strengthened against a number of major currencies on Wednesday (July 8th) after President Donald Trump signaled pessimism regarding the interim peace deal with Iran. This condition boosted safe-haven demand for the dollar, as investors again avoided risk amid escalating geopolitical tensions.
The US Dollar Index rose around 0.2% in the European session, recording gains for the fourth consecutive day. Market sentiment shifted rapidly after Trump said that the ceasefire with Iran was likely "over." This statement immediately triggered an influx into dollar assets, considered the most liquid and safe.
Trump's comments came after Iran claimed to have attacked US military sites in Kuwait and Bahrain. Tehran described the attacks as retaliation for American attacks on Iranian targets and Washington's decision to lift sanctions on Iranian oil exports. This move was previously considered by Iran to be a direct violation of the peace agreement framework.
These tensions also sent oil prices soaring. Brent crude oil reportedly rose 6.6% as market concerns resurfaced over energy supply disruptions from the Middle East, particularly after renewed conflict affected the Strait of Hormuz and US military facilities in the Gulf.
In addition to geopolitical factors, the dollar also received support from market anxiety ahead of the release of the Federal Reserve's June meeting minutes. These minutes are highly anticipated because they are the first under new Fed Chairman Kevin Warsh, who is known for his reserved nature and heavy reliance on data for policy direction.
The market is now trying to gauge whether the Fed will maintain its hawkish stance. Of the 18 policymakers, nine had previously predicted at least one interest rate hike before the end of the year. In other markets, the New Zealand dollar strengthened after the Reserve Bank of New Zealand raised interest rates by 25 basis points to 2.50%, while the Japanese yen remained depressed at around 162.20 per US dollar, near an intervention-prone area.
Source: Newsmaker.id
