The dollar has recovered some of the ground it lost earlier in the week in the wake of Israel’s overnight strikes on Iran. While that still leaves the greenback near its lowest level in more than three years, and close to breaking below the bottom of its post-2022 trading range, it suggests that the dollar’s safe-haven characteristics are still intact when it comes to at least some types of risk-off events. The effects of today’s strikes may prove short-lived, at least in the absence of further escalation. Next week’s FOMC policy meeting and the outlook for Fed policy more likely to have a lasting impact on financial markets. On that front, we continue to expect the FOMC to stay on hold for longer than money markets currently discount, providing a more sustained basis for a dollar rebound.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.