Dollar Surges Amid Middle East Turmoil and Inflation Fears
The dollar experienced its largest weekly rise in over a month due to escalating conflict in the Middle East and its impact on the global economy, driving investors towards safe havens. The tension between Israel and Iran, oil price increases, and potential U.S. intervention have intensified market uncertainty.
In the face of mounting uncertainties surrounding the Middle East conflict, the dollar is on track to record its most significant weekly gain in over a month. The ongoing hostilities between Israel and Iran have heightened fears of regional instability, prompting investors to seek refuge in reliable assets like the U.S. dollar.
With the dollar index reflecting a 0.5% increase this week, market eyes are fixed on a potential response from the U.S., as President Donald Trump considers military support for Israel. The economic ripples of the conflict, coupled with rising oil prices, pose new inflation challenges for global central banks already grappling with tariff impacts.
Meanwhile, currencies tied to risk sentiment, such as the Australian and New Zealand dollars, remained steady despite geopolitical tensions. The Federal Reserve's cautious but 'hawkish' stance on interest rates bolstered the dollar, even as unexpected moves by banks like Norges contributed to market volatility.
(With inputs from agencies.)
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