Market Overview

The U.S. dollar index was recorded at approximately 100 points at 03:01 ET (07:01 GMT) on Thursday, leaving the greenback largely unchanged and near a two‑month peak. The steadiness came as investors weighed fresh U.S. military strikes on Iranian targets and the accompanying escalation in the Middle East.

Geopolitical Developments

U.S. forces launched additional strikes on Iranian positions overnight, and President Donald Trump warned that further attacks would follow if Iran did not accept a deal. Iran responded with counter‑attacks on U.S. military installations in Kuwait and Bahrain and announced a temporary halt to vessel traffic through the Strait of Hormuz, a critical global oil‑shipping lane. The heightened tension pushed oil prices higher.

U.S. Inflation Data

U.S. consumer‑price data released on Wednesday showed headline CPI accelerating in May at the fastest annual rate in more than three years, primarily due to rising energy costs linked to the Middle‑East conflict. Core CPI, which excludes food and energy, rose 0.2% month‑on‑month after a 0.4% increase in April. ING analysts noted that while headline inflation was boosted by sharp gasoline and airline‑fare gains, other components were more subdued, resulting in a softer‑than‑expected core print. They projected that June’s inflation rate could ease as gasoline prices reverse, but warned that inflation remains vulnerable to ongoing energy‑price volatility.

Monetary‑Policy Outlook

The inflation reading reinforced market expectations that the Federal Reserve may keep interest rates elevated for an extended period, with participants anticipating at least one more rate hike before year‑end. Investors are awaiting U.S. producer‑price data and weekly jobless‑claims figures later in the day for additional clues on the inflation trajectory and the Fed’s policy path.

Currency Movements

The yen‑dollar pair (USD/JPY) was largely unchanged at 160.52 yen, staying above the 160‑yen threshold that prompted Japanese authorities to intervene in April. The Bank of Japan’s policy meeting scheduled for June 15‑16 is expected to result in a rate increase to 1.0% as inflation remains above the central bank’s target, despite Governor Kazuo Ueda’s hospitalization for medical treatment, which will keep him absent from the meeting. The Chinese onshore yuan (USD/CNY) traded flat.

Commodity Prices

Oil benchmarks reflected the geopolitical shock, with crude prices moving higher, while the LCO (light crude oil) and CL (crude oil) tickers showed modest declines of 1.37% and 1.27% respectively in the broader market snapshot.