Dollar benefits from safe-haven status as Middle East rages
Investing.com — The safe-haven U.S. dollar gained in early European trade Monday as the escalation of the conflict in the Middle East hit risk sentiment, following on from last week’s strong payrolls report.
At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% higher at 106.204.
The dollar was in demand Monday in the wake of the deadly attacks by militants from the Palestinian group Hamas on several Israeli towns over the weekend. In response, Israeli air strikes pounded numerous targets in Gaza, in the deadliest day of violence in the country for 50 years.
USD/JPY fell 0.1% to 149.16, as the yen also received support, but trading ranges were limited with Japan closed for a holiday.
By contrast, the Israeli shekel fell to an almost eight-year low against the U.S. dollar at 3.9230, prompting the Bank of Israel to announce it will sell up to $30 billion of foreign currency in the open market, in the central bank's first ever sale of foreign exchange, to maintain stability.
The move appeared to quickly calm the market, with the USD/ILS pair falling back to 3.9063, up 1.8%.
The greenback had benefited late last week by the release of stronger than expected payrolls data, with Friday’s release showing U.S. employment increased by the most in eight months in September.
Indications of a still tight labor market will put the focus even more on this week’s release of consumer inflation data for September, given hot inflation figures could reinforce the Fed’s message that interest rates need to remain higher for longer..
August’s CPI report showed the fastest increase in 14 months as the cost of gasoline surged, although core inflation, which excludes food and
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