DXY Stabilizes at Positive Levels, Markets Weigh Iran War and US Jobs Data
The US dollar index (DXY) weakened slightly and held around 99.00 in Asian trading on Friday, after posting modest gains in the previous session. This weakening occurred despite persistent demand for safe-haven assets, reflecting the market's increasingly selective assessment of the dollar's direction amid a combination of geopolitical risks and changing interest rate expectations.
The escalation of the US-Israel war with Iran pushed up oil prices and fueled inflation concerns, which in turn reduced market confidence in the Fed's imminent interest rate cut. At the same time, comments from Fed officials that left open the possibility of further tightening if inflation remained above target maintained fundamental support for the dollar.
The conflict entered its seventh day, with Iran launching missiles and drones into the Gulf region, including a reported attack on an oil refinery in Bahrain. Israel continued airstrikes on Tehran, while the US suspended operations at its embassy in Kuwait, maintaining the risk-off mood that typically supports the dollar, but has not yet led to consistent further gains.
On the political front, US President Donald Trump said Iranian officials contacted him to try to reach a deal to end the war, but he considered it too late and claimed the US was pushing for Iran's destruction. This statement added uncertainty to the diplomatic path and heightened market sensitivity to energy risks.
Comments from central bank officials also drew attention. Chicago Fed President Austan Goolsbee highlighted a "crisis of confidence" in the institution and emphasized that the Fed's independence is crucial to controlling inflation. This narrative is relevant because energy-based inflation expectations can strengthen market focus on the credibility of monetary policy.
Market participants are now awaiting the release of US employment data, specifically Nonfarm Payrolls (NFP), which is expected to be around 59,000 for February, up from 130,000 in January, and Retail Sales, which are projected to decline 0.3% monthly after previously being stagnant. This data has the potential to determine whether the DXY weakening continues or rebounds, especially if the employment figures again change the pricing of the Fed's interest rate expectations. (asd)
Source: Newsmaker.id
