Dollar Gains as Iran Deal Uncertainty and Higher Yields Boost Safe-Haven Appeal
The US dollar is poised for a weekly gain against major peers on Friday, driven by concerns over an Iran peace deal and higher Treasury yields.
A report from the Financial Times citing sources close to Federal Reserve Chair Kevin Warsh suggested that the Fed may raise interest rates in September, pending incoming data. This has boosted the dollar's safe-haven appeal.
The greenback also drew support from a proposed deal between Iran and Oman to help end the US-Iran conflict, which could give Tehran control over inbound traffic through the Strait of Hormuz. However, President Donald Trump said a deal to reopen the strait was imminent, but U.S. officials have repeatedly insisted that they would never agree to Iranian control.
The dollar index rose marginally to 99.954, up about 0.1% for the week, following a 1.6% plunge the previous week. Analysts pointed to the potential for a September interest rate hike, although some expect the Fed to wait until December before starting a modest tightening cycle.
The closely watched monthly US payrolls report, due later on Friday, could provide more clues on the Fed's rate path. Economists forecast a 80,000 increase in nonfarm payrolls last month after an increase of 57,000 in June.