Dollar Supported by Higher T-Note Yields and Crude Prices Amid US-Iran Conflict
The US dollar index rose 0.18% on Monday, supported by escalating US-Iran hostilities that boosted crude oil prices and raised inflation expectations, potentially prompting tighter Fed policy. Safe-haven demand also increased after Houthi rebels threatened a maritime blockade on Saudi Arabia. US economic data was slightly negative, with June leading indicators falling 0.2% month-over-month, worse than expected. The euro fell 0.22% against the dollar, pressured by dollar strength and easing German producer prices. The yen hit a one-week low amid dollar strength and higher crude prices, with intervention risk high as the yen remains near 39-year lows. Gold and silver settled mixed, with dollar strength and higher bond yields weighing on precious metals, though safe-haven demand from Middle East conflict provided some support. Markets are pricing low probabilities for rate hikes by the Fed, ECB, and BOJ at upcoming meetings.
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