Dollar Index Stabilizes Amid Oil Price Decline and US-Iran Tensions
The dollar index (DXY00) remained relatively stable at the end of Friday's trading session, despite a decline in oil prices by about -3%. The 10-year T-note yield also fell by -1.8 basis points after reaching a new 1.5-year high earlier in the day.
The dollar continued to benefit from safe-haven demand as tensions between the US and Iran escalated. President Trump stated that he is considering a 'massive attack' on Iran, which would be 'bigger than ever before', following a recent missile and drone attack by the Iran-backed Houthis on two Saudi Arabian oil tankers in the Red Sea.
The S&P July manufacturing PMI fell slightly to 53.8, while the services PMI rose to 53.6. US June new home sales increased by +1.6% month-over-month, but building permits fell -2.6%. Markets are currently discounting a 38% probability of a +25 basis point rate hike at the next FOMC meeting on July 28-29.