US Dollar Corrects, Energy Slump Dampens Fed Expectations
The US Dollar Index weakened to around 101.3 after previously reaching a one-month high of 101.5 on July 23. A slight decline in energy prices has stalled the dollar's rally.
The correction occurred as speculation eased that the Federal Reserve would raise interest rates at this month's meeting. However, the dollar remains near the 15-month high reached in late June.
Markets still expect the Fed to raise interest rates at least once this year. This expectation is supported by concerns that rising energy costs could again drive up inflation.
Energy price pressures increased after the conflict between the United States and Iran disrupted tanker shipping in the Persian Gulf and Red Sea. This disruption pushed oil and fuel prices higher.
Strong US economic data also supported the dollar. Private sector activity recorded its fastest growth this year, while initial jobless claims fell by the largest rate in nearly six decades.
As long as economic data remains solid and energy inflation risks persist, the dollar has a chance to maintain its strength. However, the oil price correction could limit the index's gains in the short term.
Source: Newsmaker.id
