"Escalating tensions in the Middle East and supply disruptions continue to propel energy prices upward, raising fears of inflationary pressures and keeping yields supported. Markets could continue to reassess the odds of a Federal Reserve monetary policy easing, gradually reducing the number of interest rate cuts expected."
"Geopolitical tensions could also continue to drive demand for the dollar as a safe-haven asset. While the latest inflation data in the US came up in line with expectations, attention could remain focused on the impact of rising oil prices."
"Looking ahead, the focus could turn to this week's key economic data, including GDP growth and PCE figures, which could influence the Fed's next move and market expectations. Signs of an economic slowdown or disinflation could put pressure on the dollar."
The dollar remained firm on Thursday as Treasury yields edged higher, driven by escalating Middle East tensions and supply disruptions pushing energy prices upward. These developments raise inflationary concerns and support yield levels. Markets are reassessing Federal Reserve monetary policy easing odds, reducing expected interest rate cuts. Geopolitical tensions boost demand for the dollar as a safe-haven asset. Recent US inflation data aligned with expectations, with core inflation cooling to 0.2% monthly while headline inflation rose to 0.3%. Upcoming economic data including GDP growth and PCE figures could influence Fed decisions and market expectations. Economic slowdown or disinflation signals could pressure the dollar, though Middle East developments remain the primary currency driver.
Read at London Business News | Londonlovesbusiness.com
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