The dollar index remained relatively unchanged on Friday due to falling oil prices, which declined by approximately 3%. This stability coincides with ongoing geopolitical tensions, particularly following missile and drone attacks by Iran-backed Houthis on Saudi oil tankers in the Red Sea. President Trump stated he is contemplating a “massive attack” on Iran in response to these incidents, which has heightened the dollar’s safe-haven appeal.
In economic data, June new home sales in the U.S. increased by 1.6% month-over-month to 628,000, exceeding expectations of 607,000. Conversely, building permits dropped by 2.6% to 1.374 million. The U.S. markets are currently pricing in a 38% probability of a 25 basis point rate hike at the upcoming Federal Open Market Committee meeting on July 28-29.
Internationally, the euro/U.S. dollar pair decreased by 0.08%, while the USD/JPY remained largely unchanged near a 39-year low. Japanese authorities have shown willingness to intervene in the foreign exchange market as the yen struggles amid weak interest differentials.
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