Dollar Steady, Euro and Pound Hold Strong
The US dollar moved steadily in trading on Wednesday (July 22nd), while the euro and pound sterling maintained their gains. Market participants were still weighing declining UK inflation data, central bank decisions in Asia, and pressure from persistently high global oil prices.
The US dollar index was flat at around 101.04 after briefly strengthening above 101 in the previous session. The greenback remained supported by high US Treasury yields and geopolitical uncertainty in the Middle East, although safe-haven demand was beginning to be somewhat balanced by more stable European market sentiment.
The pound sterling held around US$1.3448 after UK inflation data showed the CPI fell to 2.6% in June from 2.8% in May. This slowdown in inflation reinforces the view that the Bank of England can still maintain a cautious approach without needing to cut interest rates too quickly.
The euro also edged up 0.1% to around US$1.1420. Investors are likely to hold their positions ahead of the European Central Bank's policy meeting on Thursday, with the market expecting interest rates to remain unchanged at 2.25%. The main focus will be on Christine Lagarde's comments regarding the risks to energy prices on the next policy direction.
In Asia, Bank Indonesia maintained its benchmark interest rate at 6.25% to maintain rupiah stability and mitigate the risk of imported inflation due to global commodity volatility. The rupiah rose 0.1% against the US dollar, while the Japanese yen also strengthened slightly to around 162.87 per dollar, although still near its multi-decade low.
As a result, the US dollar has the potential to remain strong as long as high Treasury yields and Middle East conflicts maintain demand for safe havens. However, the euro and pound could remain supported if economic data improves and central banks are not overly dovish. Rising oil prices remain a key risk, as they could revive global inflation and complicate the central bank's interest rate cut path. (arl)
Source: Newsmaker.id
