US Dollar Index Holds Two-Month High on Oil Supply Fears Ahead of CPI
DX•The US Dollar Index remained near a two-month high after Iran targeted US bases in response to US strikes, lifting crude on supply fears. Asian FX pairs traded flat as investors awaited May US CPI to gauge Fed rate outlook, with markets pricing in at least one hike this year.
1. Dollar Index Strength
The US Dollar Index held near a two-month peak as of Wednesday, sustaining gains recorded earlier in the week and reflecting broad strength versus major Asian currencies.
2. Geopolitical Risk Spikes
Iran launched retaliatory strikes on US bases in Jordan and Gulf states, heightening concerns over Middle East stability and the security of oil shipping routes.
3. Oil Prices Climb
Crude benchmarks rose as traders factored in potential supply disruptions, contributing to inflation worries that could influence central bank decisions globally.
4. CPI Focus and Fed Outlook
Markets are now focused on the upcoming May US CPI release to assess inflation trends, with futures implying at least one Federal Reserve rate increase later this year.
