Dollar Rises 0.32% to 99.30 as Inflation Fears Offset Iran Peace Hopes

10 articles · Updated · Reuters · May 19

The dollar index climbed to 99.30 on Tuesday, with investors refocusing on the risk that energy-driven inflation could force a more hawkish Federal Reserve.
Fed funds futures now imply about 50% odds of a U.S. rate hike by December, while traders also see less aggressive tightening in Europe and Britain, widening support for the greenback.
The euro fell 0.38% to $1.1611 and sterling lost 0.26% to $1.3398, even as oil prices eased after Donald Trump said there was a "very good chance" of an Iran nuclear deal.
The yen weakened 0.14% to 159.05 per dollar, keeping it near the 160 intervention zone despite Japan's stronger-than-expected 2.1% annualized first-quarter growth and official warnings against excessive volatility.
The move extends a broader dollar bid that intensified after March disruptions around the Strait of Hormuz, though analysts say actual Fed hikes still depend on core inflation and expectations rising further.

Is the dollar's rally a sign of U.S. economic strength or a safe haven from escalating global conflicts?

As the U.S. tightens its policy, can Europe and Japan avoid becoming casualties in the global fight against inflation?

Can the Fed's hawkish policy tame war-fueled inflation without triggering a worldwide recession?