"The tensions between the United States and Iran have pushed oil prices higher, raising fears of energy-driven inflation, which helped support both the dollar and Treasury yields. The 10-year yield has climbed to its highest level in roughly two weeks."
"Recent economic data have also reinforced a constructive outlook for the currency. February's ISM Manufacturing survey confirmed a second month of expansion, while the prices component increased. As a result, the first Federal Reserve rate cut is expected later in the year than previously estimated."
"Minneapolis Fed President Neel Kashkari noted that the central bank faces a complex environment, with geopolitical shocks threatening to complicate the inflation outlook."
The dollar experienced a temporary consolidation on Wednesday as investors adopted a cautious approach before upcoming economic data releases. Escalating geopolitical tensions between the United States and Iran, combined with renewed inflation concerns, created a risk-averse environment. Rising oil prices from these tensions fueled energy-driven inflation fears, supporting both the dollar and Treasury yields, with the 10-year yield reaching its highest level in two weeks. February's ISM Manufacturing survey showed continued expansion with increased prices, pushing expectations for the first Federal Reserve rate cut later than previously anticipated, though two quarter-point cuts remain expected for the year. Upcoming employment data and services PMI reports will determine whether strong labour figures reinforce upward pressure on yields and the dollar or weaker data revives earlier policy easing expectations.
Read at London Business News | Londonlovesbusiness.com
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