Dollar Gains Amid Economic Strength, Tensions in Middle East
The US dollar gained strength on Monday due to a combination of factors including a rise in new capital goods nondefense, ex-aircraft and parts orders. The dollar index (DXY00) rose by +0.06%.
The increase in the dollar was also supported by safe-haven demand as tensions in the Middle East remained high following President Trump's comments on intensified action against Iran. However, gains in the dollar were limited as an easing of tensions between the US and Iran reduced safe-haven demand for the currency.
Additionally, Monday's 7% plunge in WTI crude oil prices lowered inflation expectations, which could prompt the Fed to pursue easier monetary policy, a negative factor for the dollar. Lower T-note yields also weakened the dollar's interest rate differentials.