Dollar Index Rises to 98.7 Ahead of Fed Meeting
The dollar index edged higher to 98.7 on Tuesday (April 28), nearing a three-week high, as growing uncertainty in the Middle East and rising oil prices rekindled concerns about inflationary pressures. Market sentiment was also influenced by the White House's statement that President Trump would respond to Iran's proposal to reopen the Strait of Hormuz "in the near future," although the plan was to postpone discussions on the nuclear issue until the situation in the Gulf calms down.
The dollar also strengthened as markets awaited the start of the Federal Reserve's two-day policy meeting, which begins today. Market participants widely expect the US benchmark interest rate to be held on hold, with expectations of no change for the remainder of the year, raising concerns about the language of the statement and the emphasis on inflation risks amid the energy boom.
In Europe, the ECB and Bank of England are scheduled to announce policy decisions, while financial markets are beginning to price in the possibility of a rate hike as early as June. The combination of geopolitical risks, inflationary channels from oil, and policy differentials between central banks are keeping demand for the dollar solid, especially against currencies sensitive to changes in interest rate expectations.
In Asia, the yen weakened after the Bank of Japan held interest rates steady and Governor Kazuo Ueda offered little guidance on the timing of the next rate hike. Overall, the dollar posted the strongest gains against the euro, the pound, and the Australian dollar, underscoring the market's shift to defensive assets as geopolitical uncertainty and the direction of global monetary policy reignite. (asd)
Source: Newsmaker.id
