Middle East tensions make the US dollar "hotter" than gold

The US dollar is "hotter" than gold

The dollar rose on Friday as traders weighed a lackluster U.S. inflation report and tensions in the Middle East, where the U.S. and Britain launched air and sea strikes against Houthi targets in Yemen.

The U.S. dollar index, which tracks the currency against six major peers, was up 0.26% at 102.48 on Friday. It has risen about 1.1% in the first half of 2024 on stronger-than-expected U.S. data, after falling 2% in 2023.

After the first half of 2024, the US dollar increased by 1.1% while the price of gold decreased slightly from 2,072 USD/ounce to 2,058 USD/ounce, equivalent to a decrease of 0.7%. It can be seen that the greenback is "hotter" than gold.

The Middle East is hotter than gold, picture 1 — Middle East tensions make the US dollar "hotter" than gold. While the world gold price slightly decreased, the US dollar index increased by 1.1% after the first half of 2024. Illustrative photo

US consumer prices rose in December as rents continued to rise, rising 0.3% on the month and 3.4% year-on-year, compared with economists ' forecasts for increases of 0.2% and 3.2%, respectively. The dollar rose after the data but ended Thursday little changed.

The euro fell 0.2% to $1.0949 on Friday. It has fallen about 0.8% through 2024 after rising 3% last year.

Traders are pricing in a 68% chance of the Federal Reserve's first 25 basis point cut in March, according to CME Group's FedWatch Tool, up from 65% on Thursday despite stronger inflation data.

Investors are keeping an eye on the Middle East, where US and UK strikes on Houthi targets marked an escalation in the fallout from the Israel-Hamas war in Gaza.

Oil prices jumped, with Brent crude up 3.9% at $80.45 a barrel, although the reaction in currency markets was muted.

The dollar was unchanged against the traditional safe-haven Japanese yen at 145.24 yen per dollar. The Swiss franc, another safe haven, fell about 0.17%.

The pound fell 0.25% to $1.273. Data showed growth was better than expected in November but remained at a three-month low.

In cryptocurrencies, bitcoin was little changed at $45,965, after rising to a two-year high overnight after the US Securities and Exchange Commission gave the green light to offer bitcoin-linked exchange-traded funds (ETFs).

Domestic USD increases slower than world

It can be seen that in the past two weeks, the USD in the world market has increased by 1.1%, higher than the common increase of 0.9% in the domestic market.

The USD/VND exchange rate at Joint Stock Commercial Bank for Foreign Trade of Vietnam ( Vietcombank ) closed the week at: 24,290 VND/USD - 24,630 VND/USD, up 210 VND/USD, equivalent to 0.87% in both directions and selling compared to the last session of 2023.

The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) adjusted the USD/VND exchange rate up by VND220/USD, equivalent to 0.9% to VND24,330/USD - VND24,630/USD. The exchange rate at the Vietnam Bank for Agriculture and Rural Development (Agribank) increased by VND220/USD, equivalent to 0.9% to VND24,320/USD - VND24,640/USD.

At Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the USD/VND exchange rate closed the week at: 24,340 VND/USD - 24,660 VND/USD, up 230 VND/USD, equivalent to 0.95%. Similarly, at Tien Phong Commercial Joint Stock Bank (TPBank), the USD was also traded at 24,328 VND/USD - 24,658 VND/USD, up 233 VND/USD, equivalent to 0.95%.

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) is a rare unit that adjusts the USD/VND exchange rate with an increase rate corresponding to the world market. The exchange rate at VietinBank is listed at: 24,295 VND/USD - 24,715 VND/USD, an increase of 290 VND/USD, equivalent to 1.2% after 2 weeks of trading.

Meanwhile, at some commercial banks, USD cash transactions incur much higher fees.

For example, at TPBank, 24,328 VND/USD – 24,658 VND/USD is the listed rate applied for buying and selling by transfer. If the transaction is in cash, the exchange rate will be 24,285 VND/USD – 24,725 VND/USD.

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