Dollar Strengthens on Strong US Data and Ongoing Tensions
The US dollar has strengthened at the beginning of August due to strong economic data and expectations that the Federal Reserve will maintain tight monetary policy. The ISM manufacturing survey for July showed an expansion in activity, with demand remaining high, production increasing, and employment continuing despite elevated interest rates.
Additionally, oil prices have risen, reaching nearly $85 a barrel as tensions between the US and Iran persist, keeping inflation risks high. This has further supported the dollar.
Attention now turns to labor market data, with upcoming releases on JOLTS, ADP, and payrolls reports expected to determine whether recent hawkish Fed pricing can be sustained. Unless employment data shows a deterioration in labor market conditions, expectations for a September rate hike are likely to remain intact.