The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, steadied after registering nearly 1% gains in the previous session, trading around 98.50 during the Asian hours on Tuesday. The Greenback appreciated as safe-haven demand increased due to the Middle East war.
US President Donald Trump said the “big wave” of strikes against Iran in the ongoing conflict is still to come. Marco Rubio stated that the United States (US) is preparing for a “major uptick” in attacks in Iran over the next 24 hours. The United States (US) and Israel hit thousands of targets inside Iran, continuing their joint campaign after they killed its supreme leader, Ayatollah Ali Khamenei.
A Reuters report cited Ebrahim Jabari, senior adviser to the commander-in-chief of the Islamic Revolutionary Guard Corps (IRGC), as saying: “The Strait of Hormuz is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze.”
On the data front, the Institute for Supply Management (ISM) Manufacturing PMI slipped to 52.4 in February from 52.6 in January, but still beat expectations of 51.8. The Manufacturing Employment Index rose to 48.8 from 48.1, though it remained in contraction territory.
The US Dollar gained additional support on expectations that higher energy prices linked to the conflict will stoke inflation and lower the chances of near-term rate cuts by the Federal Reserve (Fed). At the same time, elevated energy costs and inflation risks pressured currencies of major energy-importing economies, particularly in Europe and Japan.
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