Dollar Strengthens, Markets Eye Hormuz and Fed Outlook
The US dollar index held around 98.8 on Friday (April 24th) and was on track for its first weekly gain in three weeks. Demand for the dollar as a safe haven asset increased as US-Iran peace efforts stalled and geopolitical tensions persisted.
Tensions returned to focus after President Donald Trump announced he had ordered the US Navy to crack down on ships docked in the Strait of Hormuz. This statement reinforced market perceptions that the security risks of the shipping lane remain high amid the fast-moving situation.
The Strait of Hormuz remains effectively closed, with both sides maintaining their respective blockades. This situation has kept energy prices high and heightened inflation concerns, making the market more cautious about increasing exposure to risky assets.
On the monetary policy front, the market widely expects the Federal Reserve to maintain its benchmark interest rate at its meeting next week and likely for most of this year. Market participants believe the central bank will await clearer evidence on the impact of the Iran conflict on inflation and growth before changing policy direction.
Investors are also paying close attention to comments from Fed chairman candidate Kevin Warsh, who emphasized his commitment to maintaining monetary policy independence. A combination of geopolitical risks, energy inflation pressures, and expectations of persistently tight interest rates are key factors supporting the dollar in the short term. (asd)
Source: Newsmaker.id
