Dollar holds steady

The dollar was flat on Friday, but ended the week lower. This came as tame US inflation data led traders to cut bets on imminent rate hikes from the Federal Reserve.

Iran and the US exchanged intensifying fire in a week-long escalation. This has largely unravelled last month’s truce. The conflict spurred safe-haven bids for the dollar. It also pushed oil prices to near one-month highs.

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Elias Haddad, global head of markets strategy at Brown Brothers Harriman, commented on the situation. He said the tech-led global equity market plunge has triggered a flight to safety.

He added that ongoing disruption to Strait of Hormuz traffic also drove this shift. The US dollar recovered some of this week’s losses, and global bond yields edged a bit lower.

The dollar index, which measures the US currency against six other units, was at 100.76. It was set for a weekly drop of 0.2 percent. The index hit a one-month low earlier this week.

This decline followed easing chances of a near-term rate hike. However, safe-haven flows have helped support the greenback. The euro remained flat at 1.1436 dollars, putting it at a 0.2 percent rise in the week.

Sterling fell 0.2 percent to 1.3455 dollars. It posted its third straight week of gains. This followed UK economic growth figures and expectations for greater political certainty.

Incoming Prime Minister Andy Burnham is reportedly set to pick a centrist finance minister. The Australian dollar ended with a third week of gains. It was 0.23 percent softer on the day at 0.6980 dollars.

This happened as risk-off sentiment prevailed. Global stocks fell on Friday. US consumer sentiment climbed to a five-month high in July.

Traders said the respite may prove temporary. This is due to renewed conflict in the Middle East driving up gasoline prices.

The Japanese yen was flat, fetching 162.44 per US dollar. It remained rooted near the 40-year low of 162.84 it touched at the start of the month.