The US dollar held firm on Friday, remaining close to multi-week highs as resilient domestic data and persistent uncertainty surrounding US-Iran negotiations continued to support the currency.
Diplomatic efforts remain constrained by disagreements over Tehran’s uranium stockpile and the future of the Strait of Hormuz, keeping the safe-haven demand for the dollar intact.
Recent economic releases have reinforced the expectations for a cautious approach from the Federal Reserve and strengthened the broader higher-for-longer narrative.
While forecasts still point to rates staying unchanged this year, a hike remains a possibility later on, particularly if inflationary pressures persist, which would provide a constructive backdrop for both Treasury yields and the dollar.
Labour market data continued to point toward underlying resilience. Initial jobless claims remained stable at relatively low levels, while continuing claims stayed below expectations. Business activity also showed continued strength, with manufacturing activity accelerating to its strongest level in several years. Although service activity moderated slightly, the sector remained in expansion territory, suggesting that overall economic momentum remains solid.
Attention now turns to the release of the Michigan Consumer Sentiment Index. Evidence of resilient consumer confidence would likely reinforce support for Treasury yields and the dollar, while softer readings could temper the current bullish momentum.
Leave a Comment