Dollar Dominates Amid Economic Surprises and Global Tensions

The U.S. dollar experienced its strongest weekly performance since October, driven by robust economic data, a hawkish Federal Reserve, and geopolitical tensions with Iran. Improved labor market indicators and looming rate decisions keep markets focused on potential economic impacts.

The U.S. dollar is enjoying its most robust weekly performance since October, thanks to unexpectedly strong economic data, a more assertive Federal Reserve stance, and rising tensions between the U.S. and Iran. The greenback has benefited from better-than-anticipated unemployment figures, highlighting labor market stability.

As European counterparts like the euro and sterling struggle, the dollar's resilience contrasts sharply, with investors closely monitoring Federal Reserve policy signals. Expectations are rife regarding potential interest rate adjustments, amid policy debates about inflation control versus employment support. Meanwhile, geopolitical uncertainties, notably U.S.-Iran relations, continue to provide the dollar with safe-haven appeal.

The focus remains on key U.S. economic indicators, such as the core PCE price index and GDP figures, which could influence upcoming currency moves. Global currencies are also reacting to local economic contexts, as seen with Australia's rate optimism and New Zealand's more cautious approach.

(With inputs from agencies.)