Dollar Gains Amid Strong US Economic Data
The U.S. dollar rose slightly as new capital goods orders exceeded forecasts, signaling economic strength. The dollar also benefited from safe-haven demand due to geopolitical tensions in the Middle East, although gains were limited by easing regional tensions and a sharp drop in crude oil prices that reduced inflation expectations. Meanwhile, European markets showed mixed reactions. The euro dipped slightly but found support after Germany’s IFO business confidence index hit a five-month high. ECB member Peter Kazimir hinted at further rate hikes to control inflation risks. In Japan, the yen rebounded from record lows amid concerns over energy prices and potential government intervention in forex markets. The drop in oil prices is seen as beneficial for both the Eurozone and Japanese economies due to their reliance on imported energy. However, weak interest rate differentials continue to weigh on the yen’s performance.