"The US dollar was relatively stable on Wednesday, trading near a six-week high as persistent uncertainty surrounding the geopolitical situation in the Middle East could continue to support safe-haven demand. Concerns over the duration of the tensions and the absence of meaningful progress toward a diplomatic resolution continued to sustain caution, while prolonged supply disruptions and elevated oil prices fuel inflation expectations."
"As a result, Treasury yields remain at elevated levels, with the 30-year US Treasury yield reaching its highest level in decades and the 10-year yield climbing to fresh one-year highs, supporting the greenback. The domestic backdrop has also added support to the currency as recent labour market figures pointed to continued strength in hiring activity, while the Federal Reserve is increasingly expected to raise rates next year."
"Attention now turns to the release of the FOMC minutes, which could offer greater insight into policymakers' views on inflation and the future direction of monetary policy. At the same time, the US currency could remain exposed to any new developments in the Middle East and any change in inflation expectations."
The US dollar stayed relatively stable near a six-week high as ongoing geopolitical uncertainty in the Middle East supported safe-haven demand. Concerns about how long tensions will last and the lack of progress toward a diplomatic resolution increased caution. Prolonged supply disruptions and higher oil prices raised inflation expectations. Treasury yields remained elevated, with the 30-year yield at its highest level in decades and the 10-year yield reaching fresh one-year highs, which supported the dollar. Strong hiring activity from recent labor market data also added support. The Federal Reserve is increasingly expected to raise rates next year. The FOMC minutes could provide further insight into inflation views and future monetary policy, while new Middle East developments and shifts in inflation expectations could affect the currency.
Read at London Business News | Londonlovesbusiness.com
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