Today's markets analysis on behalf of Mahmoud Mashal, Senior Market Analyst, VT Markets Dubai'
(MENAFN- MENAFNEditorial)
The US dollar traded within a narrow range on Monday, remaining close to the 18-month high reached last week amid a cautious stance ahead of a busy US data calendar that could reshape interest-rate expectations. Holidays in the US and Japan also kept liquidity relatively thin.
Markets assign around a 20% probability to a hike at the Fed's October meeting but still expect one increase by year-end, with further tightening priced into mid-2027, supporting the dollar and yields. At the long end of the curve, yields could remain supported near multi-decade highs amid persistent concerns over the US fiscal outlook.
Geopolitical developments continue to provide another tailwind as persistent Middle East tensions sustain safe-haven demand for the dollar. Any renewed rise in oil prices could revive inflation concerns and place upward pressure on Treasury yields. Progress towards de-escalation could leave the greenback more dependent on incoming US data.
Looking ahead, the dollar could remain near recent highs until this week's inflation figures provide clearer direction. Wednesday's CPI report is the main test. Persistent inflation could lift front-end yields, while a softer reading could push tightening expectations further out and challenge the dollar's recent strength. Thursday's PPI will provide another inflation signal.
Elsewhere, French fiscal concerns continue to weigh on the euro, while the yen's proximity to 160 per dollar keeps intervention risk in focus and could limit further dollar gains against the Japanese currency.
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The US dollar traded within a narrow range on Monday, remaining close to the 18-month high reached last week amid a cautious stance ahead of a busy US data calendar that could reshape interest-rate expectations. Holidays in the US and Japan also kept liquidity relatively thin.
Markets assign around a 20% probability to a hike at the Fed's October meeting but still expect one increase by year-end, with further tightening priced into mid-2027, supporting the dollar and yields. At the long end of the curve, yields could remain supported near multi-decade highs amid persistent concerns over the US fiscal outlook.
Geopolitical developments continue to provide another tailwind as persistent Middle East tensions sustain safe-haven demand for the dollar. Any renewed rise in oil prices could revive inflation concerns and place upward pressure on Treasury yields. Progress towards de-escalation could leave the greenback more dependent on incoming US data.
Looking ahead, the dollar could remain near recent highs until this week's inflation figures provide clearer direction. Wednesday's CPI report is the main test. Persistent inflation could lift front-end yields, while a softer reading could push tightening expectations further out and challenge the dollar's recent strength. Thursday's PPI will provide another inflation signal.
Elsewhere, French fiscal concerns continue to weigh on the euro, while the yen's proximity to 160 per dollar keeps intervention risk in focus and could limit further dollar gains against the Japanese currency.
Appreciate your cooperation in publishing the analysis.
For any inquiry or more information please do not hesitate to contact us.
Regards
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