UOB analysts report that the US Dollar index DXY posted another small gain as markets digested a four-week ceasefire in the Middle East and reduced fears of a renewed US-Iran conflict. They highlight upcoming Fed speeches, noting that market focus will likely shift to the US Treasury's quarterly refunding details.

Broad Dollar stays modestly supported

"The broad dollar index (DXY) eked out another small gain overnight of 0.1% to settle at 98.483 as the four-week ceasefire in the Middle East held and the US downplayed the prospect of a return to active war with Iran."

"Markets were relatively calmer overnight as the four-week ceasefire in the Middle East remained and the US downplayed the prospect of a return to active war with Iran, despite President Trump remarking that the Iranian war conflict could persist for another two to three weeks."

"Broad USD gained tad higher as oil prices remained elevated. On the economic front, job openings were little changed in Mar while hiring rebounded as the labor market showed continued signs of stabilization. Separate figures showed a pickup in new-home sales. The services expansion cooled in Apr as order growth slowed."

"NY Fed President John Williams projected that the effect of tariffs could phase out from the inflation rate in the coming quarters, though the impact "has not yet fully played out" while Fed Governor Michael Barr warned that rising energy costs, which was already elevated due to increased electricity demand from data centers, could be made worse by the Iran war, depending on how long the Strait of Hormuz remains closed."

"Tonight’s US data releases are light with only MBA mortgage applications data is due for week ending 1 May (prior reading: -1.6%) and Apr’s ADP employment change (est. 120k vs. 62k prior). However, attention is very likely to be on the announcement of the US Treasury quarterly refunding announcement."

"For tonight, Fed’s Musalem is scheduled to speak at the Mississippi Bankers Association"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)