The dollar index (DXY00) today rose to a 1-week high and is up by +0.05%. The dollar is slightly higher today as the risk of a protracted Iran war boosts safe-haven demand for the dollar. Also, today’s +3% rally in crude oil prices is pushing inflation expectations higher, potentially forcing the Fed to keep monetary policy restrictive, a bullish factor for the dollar. Today’s stock slump is also boosting liquidity demand for the dollar. The dollar fell back from its best level after the University of Michigan US Mar consumer sentiment index was revised lower than expected.
The dollar found support today as Iran and Israel exchanged missile fire, and Iran targeted several Gulf states as the war entered its 27th day. Saudi Arabia said it intercepted two ballistic missiles headed for Riyadh, and Kuwait said drones damaged the port of Shuwaikh, while another port called Mubarek Al Kabeer was also targeted. Meanwhile, the Wall Street Journal reported the Pentagon is considering sending as many as 10,000 additional troops to the Middle East.
