Dollar Soars on Hawkish Fed and Geopolitical Tensions
The dollar has risen sharply this week, defying expectations of a steady market. The US Federal Reserve's hawkish stance and strong economic data have lent support to the currency, with the dollar index up around 1% on the week.
Geopolitical tensions, particularly in the Middle East conflict, have also contributed to the dollar's rise as risk aversion dominates markets. Despite reports of US and Iranian officials exploring a phased path out of the conflict, sentiment remains cautious.
The eurozone economy has shown resilience despite the global uncertainty, with strong PMI data and a robust German Ifo survey highlighting solid underlying momentum. However, this has done little to strengthen the case for an ECB hike in October.
For sterling, it's been a tough week, with the pound lower against every G10 currency bar the AUD. Soft risk sentiment and renewed demand for the US dollar have weighed on GBP/USD, which is down over 1.2% on the week.