U.S. Dollar Advances Amid Concerns Of Delay In Oil Output Recovery In Gulf

(RTTNews) - The U.S. Dollar value edged higher as energy experts warn of a delayed recovery in oil production and supply even if the upcoming U.S.-Iran peace deal holds. In addition, today's stronger-than-expected U.S. economic reports supported the dollar.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 100.39, up by 0.84 (or 0.84%) today.

While against the Euro, USD was trading at 1.150, up by 0.92%, against the GBP, it was trading at 1.329, up by 0.97%.

Against the USD, the Japanese Yen was trading at 160.686, down by 0.19%; the Swiss Franc was trading at 0.799, down by 0.82%; and the Canadian Dollar was trading at 1.410, down by 0.76%.

Against one unit of Australian Dollar, USD was trading at 0.701, up by 0.75%.

After confirming on Sunday that the Strait of Hormuz will reopen once the U.S.-Iran deal is signed on Friday, today U.S. President Donald Trump warned that he may reorder bombing Iran if the deal fails to meet his expectations.

Trump emphasized that the Memorandum of Understanding is not a final one.

Aside from this, energy experts have raised doubts on quick restoration of normalcy in oil output and supply in the Arab region even if the strait is reopened by next week.

Ship owners are concerned of risks from sea mines and the uncertainty over new insurance premiums that increased substantially due to war.

In addition, citing the long time and exorbitant funds needed for reconstruction of war-damaged oil facilities, experts prefer to wait and watch how things pan out.

The Paris-based International Energy Agency has stated that oil inventories could reach historic lows in the coming months despite hopes of a peace agreement between US and Iran that would reopen the Strait of Hormuz.

Consequently, the U.S. Dollar Index received upside support.

According to the U.S. Census Bureau, the month-on-month retail sales increased 0.90% in May, higher than a downwardly revised 0.40% rise in April, and above forecasts of 0.50%, indicating a strong consumer spending. Year-over-year, it rose by 6.90%, marking a sharp acceleration from the 4.80% increase in April.

Data from the U.S. Association of Realtors revealed that on a month-on-month basis, pending home sales surged 3.80% in May, following a downwardly revised 0.30% rise in April, and exceeding market expectations of 0.80%. On a year-on-year basis, it increased 4.80%.

The first meeting of the U.S. Federal Reserve under the new Fed Chair Kevin Warsh who replaced Jerome Powell concluded today.

Citing resurgent inflation, the Fed left the benchmark interest rates unchanged.

The Federal Open Market Committee unanimously voted to maintain the federal funds rate at 3.50% to 3.75%, in line with expectations of economists.

In its Summary of Economic Projections, nearly half of FOMC members supported an interest rate hike later this year.

Of significant note, Warsh announced that the Fed is exploring new ways to collect economic data including private-sector indicators.

Warsh emphasized that markets must focus on the developments in the real economy instead of excessively concentrating on central bank's guidance.