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DXY rises above 99.5 as Middle East tensions boost safe haven demand
The greenback also got support from weaker-than-expected July employment data, with September rate hike odds falling to about 46% from 67% a week earlier.
The US Dollar Index, which tracks the greenback versus six major currencies, advanced above 99.50 and traded around 99.70 in Asian hours on Monday, after modest losses the prior day, according to FXStreet.
FXStreet attributed the dollar strength to broader risk aversion tied to persistent geopolitical tensions in the United States-Iran conflict, including developments around the Strait of Hormuz. It noted that safe haven demand for the dollar remained intact even as Iranian officials said Oman-mediated negotiations were making progress.
The outlook for Federal Reserve policy also shifted after US Nonfarm Payrolls declined by 23,000 in July, with revisions showing 20,000 jobs down from 57,000 in June, weakening expectations for a near-term rate hike. The CME FedWatch Tool suggested markets now assign about a 46% probability to a 25 basis point hike in September, down from 67% a week earlier.
FXStreet added that investors are looking to upcoming inflation reports for additional guidance, while also pointing to a slightly softer tone from Fed official Barkin, reflected in a 5.4 out of 10 FXS Speechtracker score versus a 5.8 historical average. It said the Fed sentiment gauge fell by 1.68 points to 137.01, indicating a pullback in perceived hawkishness, though overall communication remains anchored in restrictive territory.
Latest closeDollar index 99.98 ▲0.3%