The dollar index (DXY) reached a two-week high today, rising by 0.35%, driven by safe-haven demand amid concerns of an escalating conflict in Iran. President Trump indicated a willingness to seize Iranian oil, marking a potential escalation with U.S. ground troops. Despite the dollar’s gains, interest rate differentials are limiting its rise, with markets pricing in only a 3% chance of a 25 basis point hike at the upcoming FOMC meeting on April 28-29.
The Eurozone’s March economic sentiment index dropped to a six-month low of 96.6, below expectations of 96.7, while German CPI rose 1.2% month-over-month and 2.8% year-over-year, marking its largest annual increase in two years. The euro fell to a one-week low against the dollar, down 0.42%. Market expectations suggest a 52% chance of a 25 basis point hike from the ECB at its meeting on April 30.
Precious metals, particularly gold and silver, benefitted from safe-haven demand linked to ongoing conflicts, with gold prices up 0.66%. Amid geopolitical tensions, Saudi Arabia granted U.S. military access to King Fahd Air Base, highlighting regional dissatisfaction with Iran’s actions. Meanwhile, China’s PBOC increased its gold holdings to 74.19 million troy ounces, supporting gold prices despite recent fund liquidations.
