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05.03.202614:03:06UTC+00Dollar Above 99

The dollar index climbed to 99.1 on Thursday, its highest level since mid-January, as the escalating conflict with Iran renewed safe-haven demand. Early market relief faded as the war entered its sixth day. Both Iran and the US signaled that attacks could intensify in the coming days, driving oil and natural gas prices higher, reigniting inflation concerns, and prompting traders to scale back expectations for Federal Reserve rate cuts to just one this year, down from two earlier in the week.

At the same time, recent economic data underscored the resilience of the US economy. Initial jobless claims came in below forecasts, productivity rose more than expected last quarter, job cuts fell sharply, and the ISM Services PMI showed the sector unexpectedly expanding at its fastest pace since mid-2022. In addition, investors increasingly view the US as a relative safe haven thanks to its greater energy independence, further bolstering the dollar. The greenback posted its strongest gains against the Australian dollar, the yen, and the euro.

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