The dollar index climbed above 99.6 on Thursday, advancing for a fourth straight session and hitting its highest level since November 2024 amid rising tensions with Iran. The country’s new supreme leader declared that the Strait of Hormuz should remain closed, stating that the war would continue “out of necessity” and that additional fronts were under consideration.
At the same time, the ongoing surge in oil prices is reinforcing expectations of higher inflation. Yields are also coming under pressure from growing concerns over the fiscal outlook, particularly in light of increasing defense expenditures.
The Federal Reserve is widely expected to leave the federal funds rate unchanged at next week’s meeting, with market attention centered on the updated dot plot and policymakers’ projections for the rest of the year. Futures markets currently imply just one 25-basis-point rate hike, most likely in September. The dollar strengthened against all major currencies.
