Dollar Holds Above 99, Markets Digest Signals of US-Iran Diplomacy
The US dollar index (DXY) held above the 99 level and extended gains for a second day in Asian trading on Wednesday, trading around 99.30. However, the greenback's gains were restrained as markets weighed reports that Washington was pushing for negotiations with Iran to de-escalate the conflict, which could potentially reduce safe-haven demand if concrete progress is made.
US President Donald Trump said Iran offered a goodwill gesture related to energy flows through the Strait of Hormuz. Israeli media reported that the US was seeking a one-month ceasefire to facilitate talks, while the New York Times reported that Washington had presented a 15-point proposal. However, Iran rejected claims of US diplomatic progress, although a senior Iranian source said messages were exchanged through Pakistan as a mediator and the possibility of a direct meeting in the coming days.
On the monetary policy front, comments from Fed officials kept the dollar supported. Chicago Fed President Austan Goolsbee warned that energy shocks could strain both sides of the Fed's mandate, so the prospect of interest rate cuts remains contingent on the duration of the conflict and the progress of inflation. Fed Governor Michael Barr also stated that interest rates may need to be held on hold for some time because inflation remains above the 2% target and the risks from the Middle East conflict have not disappeared.
Source: Newsmaker.id
