US Dollar Index strengthens above 100.00 on upbeat US NFP, geopolitical risks
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 100.25 during the Asian trading hours on Monday. The DXY edges higher on the stronger-than-expected US jobs data and heightened uncertainty in the Middle East.
Data released by the US Bureau of Labor Statistics (BLS) on Friday revealed that the US economy added 178,000 jobs in March, compared to a 133,000 decline (revised from -92,000) in February. This reading came in better than the estimations of a 60,000 gain. The Unemployment Rate edged lower to 4.3%, though that was largely from a sharp reduction in the labor force.
Following the upbeat jobs report, futures pointed to virtually no chance of a move at the April 28-29 Federal Open Market Committee (FOMC) meeting and a 77.5% probability the Fed will stay on hold through the end of the year, according to the CME FedWatch tool.
Rising tensions between the US and Iran might contribute to the US Dollar’s upside as a safe-haven asset. US President Donald Trump set a Tuesday deadline for Iran to reopen the Strait of Hormuz, threatening to hit the country’s power plants and bridges if it does not comply. Iran's foreign ministry spokesperson said that Tehran will reciprocate attacks on its infrastructure and target similar infrastructure owned by the US or related.
Traders brace for the US March ISM Services Purchasing Managers Index (PMI) data later on Monday. If the report shows a weaker-than-expected outcome, this could drag the DXY lower in the near term.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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