Dollar Gains for 3rd Day

The dollar index edged up to 99.9 on Thursday, a third consecutive session of gains, as investors continued to assess developments in the Middle East and their implications for oil prices, inflation, and economic growth. Also, mounting doubts over a near-term end to the war with Iran weighed on sentiment, with President Donald Trump saying he would not commit to a deal to end the conflict while Tehran shows little willingness to compromise. Disruptions linked to the conflict have pushed energy prices higher, reinforcing inflation concerns and strengthening expectations that the Fed will keep interest rates steady throughout the year. On the data front, initial jobless claims edged up slightly to 210K, while continuing claims fell to a near two-year low. The greenback was mostly higher against the euro and the Australian dollar.

The dollar index held around 99.6 on Thursday after rising in the previous session, as investors continued to monitor developments in the Middle East amid heightened uncertainty over efforts to end the Iran war. The White House maintained that talks are ongoing, with the Trump administration reportedly sending a 15-point plan to Iran via Pakistan aimed at resolving the conflict. Top Iranian authorities are reviewing the US proposal but indicated no intention of holding talks with Washington. Tehran said it would reject a US ceasefire offer, instead countering with a five-point plan that would grant it control over the Strait of Hormuz. Disruptions from the conflict have pushed energy prices higher, fueling inflation concerns and reinforcing expectations that the Federal Reserve will keep interest rates steady throughout the year. Investors now turn to the latest weekly jobless claims data on Thursday for fresh signals on labor market conditions.

The dollar index was little changed at around 99.4 on Wednesday, remaining below the ten-month highs reached earlier this month, as traders weighed the prospects of a potential de-escalation in the conflict with Iran. US President Trump said Washington was negotiating with Tehran and suggested that Iran may be willing to reach a peace agreement, although Iranian authorities have denied engaging in direct talks. He also noted that he had stepped back from his recent threat to order strikes on Iranian energy infrastructure “based on the fact that we’re negotiating”. Oil prices fell by around 6% in response, providing some temporary relief from concerns over a renewed spike in inflation. Meanwhile, traders have scaled back expectations for Federal Reserve rate cuts this year and now anticipate no reductions for the time being.