Dollar Steady, Fed Sentiment Weighs
The US dollar stabilized in trading on Friday (July 17th), but remained on track for a weekly decline. Pressure on the greenback emerged after weaker-than-expected US inflation data led markets to cut expectations of an imminent Fed interest rate hike.
The dollar index moved sideways, while the euro weakened slightly against the US dollar. Throughout the week, currency markets were influenced by changing expectations for global monetary policy and rising geopolitical tensions in the Middle East.
Initially, the escalation between Washington and Iran boosted demand for the dollar as a safe-haven asset. However, this sentiment was tempered after US inflation data showed a surprising slowdown. This condition prompted market participants to unwind long dollar positions.
In the UK, the pound sterling recorded weekly gains, despite weakening slightly in daily trading. Sentiment towards the pound was supported by easing fiscal concerns after Prime Minister-designate Andy Burnham reportedly chose a more moderate figure for the position of finance minister.
Meanwhile, the euro remained relatively resilient despite eurozone inflation data slowing to 2.8% in June from 3.2% the previous month. Slowing inflation gives the European Central Bank some room, but markets are still awaiting the ECB's policy direction at next week's meeting.
As a result, the dollar remains under pressure as expectations for a Fed rate hike begin to ease. However, the Middle East conflict and the risk of Japanese yen intervention continue to keep markets cautious. If geopolitical tensions escalate, demand for safe havens could potentially further stem the dollar's decline. (arl)
Source: Newsmaker.id
