The US Dollar Index slipped nearly 0.4% below 102.00 on Monday as geopolitical de-escalation and lower oil prices spurred risk appetite, though strong labor data and Fed hike bets provide a potential floor.
The Dollar Index has fallen nearly 0.4% below 102.00 on Monday as the weakest major currency, with improved risk appetite on Middle East peace progress and oil near two-month lows eroding safe-haven demand. ING argues lower front-end US rates favour a weaker Dollar if markets stabilise. However, strong Nonfarm Payrolls from last Friday and rising bets on a December Fed hike are likely to set a floor on USD dips.
Oil has dropped to levels near two-month lows as US-Iran de-escalation reduces supply-risk premium: Trump said on Sunday he was highly unlikely to order new attacks on Iran, and Qatari-mediated talks are intensifying with a White House meeting later Monday. Easing geopolitical risk directly removes the conflict premium from crude. Any breakdown in talks would likely reverse the drop.
The US Dollar Index (DXY) fell nearly 0.4% to session lows below 102.00 on Monday as improved market sentiment reduced safe-haven demand. Progress in US-Iran peace negotiations and a drop in oil prices to near two-month lows have boosted risk appetite, overshadowing last Friday's strong Nonfarm Payrolls report. Investors are now looking toward Tuesday's US CPI data for further direction on the currency.
Improving risk appetite, progress in US-Iran peace negotiations and oil prices dropping to near two-month lows are reducing demand for the safe-haven Dollar, pushing the DXY below 102.00 with a near 0.4% dip.
Friday's strong Nonfarm Payrolls report and rising bets the Fed will hike rates in December are likely to set a floor on USD dips, and Tuesday's CPI release is being watched with particular interest.
Progress in efforts to bring US and Iranian negotiators back to the table, including Trump saying he is highly unlikely to order new attacks on Iran, is easing Middle East supply fears and dragging oil down near two-month lows.