Forex
Home›Forex›Major Pairs›Dollar gains support as Middle East tensions and US da…
Dollar gains support as Middle East tensions and US data curb selling
MUFG says a renewed spike in Brent or escalation in the conflict could bring forward Fed tightening and delay a potential renewed downtrend in the dollar.
MUFG currency strategist Derek Halpenny said ongoing Middle East conflict, firmer US data, and crude oil risks are limiting investors’ appetite to sell the US dollar.
Halpenny noted that while recent improvements in US manufacturing and retail have helped, they have not meaningfully shifted expectations for Federal Reserve policy, with a full hike still priced by year-end.
He warned that if Brent were to jump sharply or the conflict escalates, the Fed could tighten sooner, which would delay a renewed downtrend in the dollar.
FXStreet also highlighted that the strategist pointed to a sharp rebound in the Philly Fed manufacturing index to 41.4 from 10.3, and robust retail sales, with the control group up 0.5% after an upwardly revised 0.8% in May. MUFG added that the main deterrent to renewed dollar selling remains the risk of higher crude oil prices, including concerns that shipping through the Strait of Hormuz could become problematic within weeks, according to the IEA.
Latest closeWTI crude $79.00 ▼0.8%|Brent $84.94 ▼0.0%