Markets await U.S. inflation data after Fed officials signal inflation remains the primary concern over labor weakness.
The dollar climbed to $1.1536 against major peers on Wednesday, supported by escalating tensions in the Gulf after reported attacks on shipping and Iran’s threat to close the Strait of Hormuz. Safe-haven demand drove investors toward the USD amid concerns over potential energy supply disruptions and economic fallout from geopolitical risks.
Recent U.S. jobs data showed softer-than-expected figures, but Fed officials, including Chicago President Austan Goolsbee, emphasized inflation as the key driver for future rate decisions. Economists anticipate upcoming inflation reports to reveal a rebound in price pressures after June’s easing, with core services and shelter components under scrutiny.
Fed funds futures currently price a 50% chance of a rate hike by year-end, reflecting divided expectations. Analysts warn a strong inflation print could trigger a sharp dollar rally, while a softer reading may reinforce current positioning and limit USD gains.