Investing.com – The US dollar gave back early gains in volatile action on Wednesday as traders digested reported Israeli attacks on Iranian sites and the impact on risk appetite.
At 05:25 ET (09:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 105.870, after earlier climbing to 106.190, just marginally below five-monthly rate. peak of 106.51 seen earlier this week.
Dollar Returns Gains After Israeli Attacks
The safe-haven dollar jumped higher earlier Friday on reports that Israel attacked Iran in an escalation of the Middle East conflict, just a few days after Iran launched a drone strike on Israel.
The move marks a potential escalation in the conflict between Iran and Israel, and could herald a deterioration in geopolitical conditions in the Middle East, especially after initial reports suggested attacks near sites of Iranian nuclear weapons. facilities are located.
However, these gains have since disappeared after Iranian news agencies said there was no damage to the facilities, and that the strikes were fairly limited in scope.
That said, the dollar is still likely to have a positive week as strong US economic data and persistent inflation have prompted investors to drastically reconsider the chances of a speedy rate cut by the Federal Reserve.
A slew of hawkish comments from Fed officials have also helped the dollar, as evidenced Thursday by the president of the Atlanta Federal Reserve Bank saying that if inflation doesn’t keep moving toward the U.S. central government’s 2% target bank, central bankers should consider an interest rate hike. -interest rate increase.
Sterling is rising despite weak UK retail sales
In Europe, yields rose 0.1% to 1.0648 after falling less than expected in March, down 2.9% year-on-year, compared with an expected 3.2% decline.
In addition, Reuters reported that the German government will increase its growth forecast for the German economy this year to 0.3%, up from a previous forecast of 0.2%.
However, any euro strength could be temporary as interest rates are expected to be cut in coordination with the Federal Reserve in an effort to boost the region’s struggling economies.
climbed 0.1% higher to 1.2445 and traded just above a five-month low despite Britain’s March stagnation.
Sales volumes showed no growth last month, below the expected increase of 0.3%, marking the first time they have not grown on a monthly basis since December.
The weakness in retail spending makes it more likely that rates will start cutting in the summer, likely before the Federal Reserve.
The yen received a boost from its safe haven status
In Asia, it traded 0.1% lower at 154.47, with the safe-haven yen boosted by heightened tensions in the Middle East.
Japan’s currency remained near a 34-year low, prompting caution about possible government intervention.
rose 0.1% to 7.2417, with the yuan near a five-month high amid uncertainty over the Chinese economy.
