Dollar Steady, Middle East Sentiment and PCE Trade-Off
The dollar index moved virtually unchanged around 99 on Friday (May 29), remaining near a two-week low, but still on track to close May about 1% higher. Markets continue to monitor developments in the Middle East, with signs that the US and Iran are moving closer to a deal, although political uncertainty remains.
Recent reports suggest the two countries have reached a preliminary understanding to extend the ceasefire for 60 days and begin discussions on the future of Iran's nuclear program. However, the agreement has not yet been formally ratified by President Donald Trump. Meanwhile, weakening oil prices have helped ease energy inflation pressures, thus curbing further dollar appreciation.
Data-wise, US headline and core PCE inflation figures for April came in lower than expected, although the annual rate remained high at 3.8% (headline) and 3.3% (core), respectively, well above the Fed's inflation target. This combination keeps the market in a "wait-and-see" mode: inflationary pressures have not dissipated, but are not strong enough to force immediate policy changes.
Investors currently expect the Fed to keep interest rates unchanged until the end of the year. However, the market still assigns a 46% probability of a December rate hike, indicating the dollar remains cushioned if inflation resurfaces or geopolitical risks revive the safe-haven premium. (Arl)*
Source: Newsmaker.id
