Forex News: U.S. Dollar Edges Higher As Concerns Of Re-escalation

U.S. Dollar Edges Higher As Concerns Of Re-escalation In Gulf Intensify

(RTTNews) - The U.S. Dollar value inched higher after the two-day U.S.-China summit failed to deliver any breakthrough on a possible Chinese role to end the gulf crisis. With reopening of the Strait of Hormuz delaying along with concerns of re-escalation in the Middle East, the dollar index moved higher.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 99.27, up by 0.32 (or 0.32%) today.

On the economic front, data released by the U.S. Federal Reserve showed that the industrial production increased 0.70% in April, and on a year-on-year basis, it increased 1.40% in April.

While against the Euro, USD was trading at 1.162, up by 0.39%, against the GBP, it was trading at 1.332, up by 0.62%.

Against the USD, the Japanese Yen was trading at 158.761, down by 0.25%.

According to Bank of Japan, the month-on-month Producer Price Inflation (PPI) increased to 2.30% in April from 0.80% in March, and year on year, it rose 4.90%.

Against the Swiss Franc, the USD was trading at 0.787, down by 0.38%.

In comparison to USD, the Canadian Dollar was trading at 1.376, down by 0.27%.

Data released by Canada Mortgage and Housing Corporation revealed that housing starts in Canada jumped 17.00% to an annualized 279,300 units in April.

Against one unit of Australian Dollar, USD was trading at 0.715, up by 1.04%.

U.S. President Donald Trump departed to the U.S. from China finishing his two-day visit.

Trump and Chinese President Xi Jinping had extensive discussions covering bilateral trade and tech ties.

The talks also included the current U.S.-Iran war situation and the closure of Strait of Hormuz since February 28.

Trump stated that Xi agreed that the strait must be freely open for vessels from all countries transiting across the region.

Earlier, U.S. Secretary of State Marco Rubio had observed that Trump will attempt to convince Xi to participate actively to end the gulf war.

U.S. Treasury Secretary remarked that reopening of the strait is more beneficial to China, given its reliance on gulf energy, and added that China will work "behind the scenes" to achieve this.

During the visit, Trump revealed in an interview with Fox News that Xi wanted to see a deal made and had offered any help required to end the conflict.

Since China shares longstanding trade ties with Iran and is a major importer of Iran's oil and energy (nearly 90%), market participants anticipated a breakthrough announcement on a possible Chinese intervention or a mediation to convince Iran to reopen the Hormuz strait.

However, with no news on any possible role of China to broker peace, concerns of war resurfaced.

Days before, CNN had reported that Trump was displeased with Iran's inadequate interest in ending the war and was apparently considering recommencing the attacks on Iran which have been halted after a ceasefire declaration in early April.

While returning from China on Air Force One, Trump stated to reporters that he announced the ceasefire at the request of Pakistan though he did not personally favor it.

Iran has been consistently stating that it will not bow to any imperialist pressures and is ready to face any U.S. aggression.

Deepening escalation and the closure of strait for an indefinite period led to a surge in oil prices and the consequent inflationary pressure, supported U.S. Dollar Index on the upside.

Meanwhile, the U.S. administration has secured an extension to the Israel-Lebanon ceasefire (for 45 days) which is set to expire on Sunday. The two nations would reconvene for negotiations on June 2 and 3.

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