The dollar index (DXY) increased by 0.29% on Monday, driven by safe-haven demand amid escalating tensions in the Middle East, including missile exchanges between the US and Iran over the weekend. President Trump announced that the US is reinstating the blockade against Iran and halting their naval activities in the Strait of Hormuz. Additionally, crude oil prices surged by 9%, raising inflation expectations and influencing potential Federal Reserve monetary tightening.
The euro (EUR/USD) fell to a one-week low of -0.29%, pressured by the strong dollar and the negative impacts of rising oil prices on the Eurozone economy, which heavily relies on energy imports. Meanwhile, the Japanese yen (USD/JPY) decreased by 0.47% after reports indicated no changes to the Government Pension Investment Fund’s asset allocation, despite prior speculation. The yen, hovering around a 39-year low above 160 per dollar, faces a high risk of government intervention.
In commodity markets, August COMEX gold closed down 2.63% and September COMEX silver dropped 3.64%, reaching 1.5-week lows amid heightened inflation fears and rising global bond yields. Gold ETF holdings fell to a 9.5-month low, while China’s PBOC reserves increased by 320,000 ounces in May, marking the largest monthly gain in 17 months.
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