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01/08/24
137
USD Higher on Geopolitical Tensions
On Thursday, the US dollar rose as increasing geopolitical tensions provided the currency with a safe haven boost.
Worries about a widening Middle Eastern conflict rose this week after Wednesday morning’s assassination of Hamas leader Ismail Haniyeh in Tehran, the Iranian capital. The attack resulted in threats of revenge on Israel.
On Wednesday, the dollar also bounced on a selloff after dovish comments by Federal Reserve Chair Jerome Powell at the end of the central bank’s 2-day meeting were believed to possibly be overdone.
According to Powell, interest rates may be cut as soon as September if the U.S. economy continues along its expected path, after the Fed’s new policy statement noted that there was some more progress toward the 2% inflation objective while the unemployment rate remained low at 4.1%.
Traders are now pricing in 3 X 0.25% rate cuts by the end of the year, indicating one cut at the Fed’s meetings in Sept., Nov., and Dec.
The next major economic release from the U.S. that may influence Fed policy will be July’s government jobs report due on Friday. The report will likely show that employers added 175K jobs during the month, while the unemployment rate will likely have stayed at 4.1%.
The U.S. dollar index, which measures its strength against 6 other major currencies, was last 0.06% higher at 104.11.
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