Dollar Strengthens, US Data and Iran Risks Support
The dollar index (DXY) strengthened to 99.121 on Thursday (March 5), up around 0.36% and reaching its highest level since mid-January, supported by a combination of safe-haven demand amid the escalating conflict in Iran and repricing interest rate expectations following a string of solid US data.
On the data front, the market just received weekly jobless claims data, which also added to the narrative that the labor market remains stable. Initial jobless claims were unchanged at 213,000 for the week ending February 28 (close to expectations), while continuing claims rose by 46,000 to 1.868 million, indicating that some workers are taking longer to return to work.
EUR/USD weakened around 0.30% to 1.1598, extending pressure on the euro as markets assessed that energy shocks risk holding back faster monetary easing, while strong US data strengthened the yield differential against the dollar.
GBP/USD fell around 0.14% to 1.3358, in line with the strengthening dollar. Sterling is also sensitive to energy risks as UK inflation remains relatively high, so a surge in energy prices could potentially increase market caution regarding the interest rate outlook.
AUD/USD corrected around 0.68% to 0.7027, reflecting pressure on riskier currencies as markets combined geopolitical headlines with the "tighter Fed for longer" narrative following US data.
USD/JPY rose around 0.45% to 157.763, with the yen weakening as the dollar regained its favor as a liquid asset amid volatility. Markets continue to monitor the risk of Japanese intervention as the yen's movements become more pronounced.
USD/CHF strengthened around 0.26% to 0.7814, indicating that the franc does not always "win" during risk-off periods when the dollar is the primary destination for global liquidity, especially as expectations of a Fed cut diminish.
Source: Newsmaker.id
