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Dollar rebounds as Iran-Oman doubts and Fed data jitters boost USD
USDJPY has regained about half of its intervention-driven losses, helped by the rate gap between the Fed and the Bank of Japan and carry-trade demand.
The US dollar climbed for what was its best daily performance in two weeks as geopolitical risk rose and speculators moved toward reducing positions ahead of key US labor-market data, Action Forex reports. The outlet pointed to expectations for employment to rise by 80K and the unemployment rate to hold at 4.2%, noting that the Fed is still seen as prioritizing inflation over other releases.
Action Forex said the dollar’s strength is also being supported by renewed uncertainty over a deal involving Iran and Oman, with Brent moving back above $80 per barrel. The report linked the skepticism to hardline demands in Tehran for removal of US and Israeli ships plus sanctions and transit-fee relief, warning that any escalation could lift oil prices and Treasury yields.
In FX markets, the outlet reported that USDJPY bulls have recouped half of losses from coordinated currency intervention, with carry trades gaining traction from the wide interest-rate spread between the Federal Reserve and the Bank of Japan. It added that the market is looking for BoJ action as USDJPY approaches the ¥160 area, and cited forward-market odds of 60.0% for monetary policy tightening by September.
The piece also said gold has pulled back only temporarily as the backdrop remains influenced by real US Treasury yields, while the upcoming jobs report could be a catalyst for shifting market pricing, according to Action Forex. It noted that when inflation is high and the Fed is reluctant to tighten, precious metals can benefit from falling real yields.
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