The US dollar traded cautiously on Monday, remaining near multi-month lows as markets awaited details of new US measures targeting Iran.
Treasury Secretary Scott Bessent is expected to outline the measures later today, with investors watching for any potential impact on geopolitical tensions and Iran’s response.
A renewed escalation could strengthen safe-haven demand and provide some support to the US currency.
Attention also turns to key US economic data due on Wednesday, which could shape expectations for the Federal Reserve’s next steps.
Core PCE inflation will be closely watched for signs of whether underlying price pressures are continuing to moderate. A firmer-than-expected reading could support Treasury yields and the dollar, while softer inflation could reduce expectations of further monetary tightening.
The second estimate of second-quarter GDP will also be released on Wednesday, with markets looking for any revision to the initial 1.5% annualised growth estimate. Softer growth alongside contained inflation could reinforce expectations of a less hawkish Fed, while resilient activity combined with persistent price pressures could support yields and the dollar.
Attention later in the week will shift to Fed Chair Kevin Warsh’s remarks at the Jackson Hole Symposium, as markets look for further guidance on the policy outlook and the Federal Reserve’s assessment of inflation risks.
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