Dollar Rebounds, Hormuz Tensions Resurface as Catalyst
The US dollar strengthened again during Monday's trading (August 10) following two consecutive weeks of decline. The dollar index rose approximately 0.3% to the 99.82 level, bolstered by safe-haven demand as oil prices surged and tensions in the Middle East escalated.
Oil prices climbed nearly 5% after Iran rejected direct talks with the United States. Tehran also insisted that the Strait of Hormuz could only be fully reopened if Washington lifted its naval blockade, removed sanctions, and provided compensation for war losses.
Uncertainty mounted after Iran stated that its proposed management plan for the Strait of Hormuz could restrict vessels from the US, Israel, and other nations deemed hostile. Attacks by Houthi groups on Saudi Arabian energy facilities also drove investors back to the dollar for safety.
Conversely, weak US labor data continued to cap the dollar's gains. July's Non-Farm Payrolls (NFP) fell for the first time since February, while figures for May and June were revised downward by a combined 103,000 jobs. These conditions led the market to scale back expectations for a near-term Federal Reserve interest rate hike.
The Japanese yen was among the currencies under the most pressure. The USD/JPY pair rose about 0.9% to 159.26, causing the yen to lose some of the gains achieved following major intervention in July. The euro also dipped slightly to 1.1541, while the British pound held firmer around 1.3507.
Newsmaker Analysis: The dollar is receiving support from two opposing directions: safe-haven demand driven by Hormuz tensions, balanced against constraints from weak US labor data. Attention now shifts to the US Consumer Price Index (CPI). High inflation could push the DXY back above the 100 mark, whereas softer data could weigh on the dollar while supporting gold and other major currencies.
Source: Newsmaker.id
