"The dollar index held steady amid calmer conditions in the Middle East on Tuesday, but markets remain cautious after tensions escalated yesterday as fresh incidents in the Gulf have heightened uncertainty around the diplomatic process."
"Elevated tensions are likely to keep oil prices supported, anchoring inflation concerns and treasury yields, which remain relatively firm despite a slight retreat today."
"Attention now turns to incoming US data, which could shape expectations for the Federal Reserve's next steps, with the ISM Services PMI and JOLTS figures expected to show limited change."
"Risks of new interventions by Japanese authorities to support the yen could continue to threaten the market and could limit the upside potential for the dollar."
The dollar index maintained stability as tensions in the Middle East calmed, yet market caution persists due to heightened uncertainty from recent Gulf incidents. This uncertainty supports demand for the dollar as a safe-haven asset. Oil prices are likely to remain elevated, contributing to inflation concerns and steady treasury yields. Markets anticipate a prolonged cautious monetary policy, with interest rates expected to hold until late next year. Upcoming US data could influence Federal Reserve expectations and market volatility, while potential Japanese interventions may impact the dollar's upside.
Read at London Business News | Londonlovesbusiness.com
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