US Dollar Index: DXY supported by peace deadlock and NFP – MUFG

FXStreet Insights Team FXStreet

MUFG’s Lee Hardman notes the US Dollar (USD) has rebounded, lifting the Dollar Index (DXY) back above 98.000 as stalled Middle East peace talks and a stronger April Nonfarm Payrolls (NFP) report underpin demand. Hardman highlights risks from a prolonged Strait of Hormuz disruption, firmer US labour data, and expectations that the Federal Reserve (Fed) will keep rates on hold.

Peace impasse and jobs data back Dollar

"The US dollar has staged a modest rebound at the start of this week helping to lift the dollar index back above the 98.000-level which has provided good support over the past month."

"The US dollar has derived support overnight from reports that the US and Iran have both rejected each other’s latest peace proposals putting a dampener on investor optimism that a deal could be reached soon to end the conflict and re-open the Strait of Hormuz."

"The latest developments continue to highlight the risk of a more prolonged closure of the Strait of Hormuz which would be disruptive for the global economy and financial markets."

"At the same time, the US dollar has been supported in part by the release of the stronger than expected nonfarm payrolls report for April."

"Overall, we believe the latest developments favour the Fed leaving rates on hold."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.