Dollar Stable, Safe Havens Support
The US dollar moved flat on Friday (July 17th) but remained on track for a weekly decline. Pressure arose after more benign US inflation data prompted market participants to cut expectations for an imminent Fed interest rate hike.
The dollar index hovered around 100.75 and has the potential to fall 0.2% this week. Previously, the index had touched a one-month low as the likelihood of a near-term interest rate hike diminished.
However, the dollar's decline was offset by increased demand for safe-haven assets. Tensions between Iran and the United States escalated again this week, sending oil prices near one-month highs and disrupting shipping flows in the Strait of Hormuz.
In the currency market, the euro was steady at US$1.1437 and headed for a 0.2% weekly gain. The pound sterling weakened 0.23% to US$1.3456 but remained on track for a third consecutive weekly gain, supported by UK economic growth and increasing political certainty.
The Japanese yen remained near its weakest level in 40 years at around 162 per US dollar. The market remains wary of the risk of intervention from Tokyo after the Japanese Finance Minister reiterated the government's readiness to take decisive action against excessive currency fluctuations.
As a result, the dollar remains in a tug-of-war between cooler inflation data and safe-haven demand due to the Middle East conflict. If oil prices continue to rise and inflation risks intensify, the market will again be wary of the possibility of tighter policy from the Fed until the end of the year.
Source: Newsmaker.id
