The dollar index climbed to 99.9 on Wednesday, its highest level in three weeks, as a hawkish tone from Federal Reserve policymakers and ongoing geopolitical tensions bolstered demand for the greenback as a safe-haven asset. The Fed left policy rates unchanged, in line with market expectations, but three FOMC members dissented from the central bank’s easing bias. This raised the bar for regional Fed presidents—typically more hawkish—to support any eventual rate cuts.
At the same time, President Trump indicated that the blockade of tankers in the Persian Gulf would be lifted only in the context of a new Iranian nuclear agreement, adding further complexity to the conflict and sustaining global demand for the dollar.
Elsewhere, the Bank of Canada signaled in its own rate hold that it does not expect domestic inflation to become unanchored, while the Bank of Japan struck a comparatively hawkish note in its latest meeting. Both the European Central Bank and the Bank of England are scheduled to announce their rate decisions tomorrow.
