Dollar Hits One-Week High on Inflation, Iran Tensions, Trump-Xi Talks
In simple terms, things are getting more expensive faster than expected, and the Federal Reserve cannot cut interest rates when inflation is this high. Markets now see a 35% chance the Fed actually raises rates in December rather than cutting them. Why the Dollar Is Rising When inflation runs hot and the Fed has to keep rates high, the dollar gets stronger. Higher US interest rates make dollar-denominated assets more attractive to global investors, pulling money into the dollar and pushing other currencies lower. “The US dollar has been tracking risk sentiment very closely throughout the war,” said Ray Attrill, head of FX strategy at National Australia Bank. The Iran Ceasefire Is Falling Apart Making everything worse, hopes for a Middle East peace deal faded sharply after Trump said the ceasefire with Iran was “on life support.” Tehran rejected the US peace proposal and presented its own list of demands. Trump called them “garbage.” All Eyes on Trump and Xi The other major risk event is the Trump-Xi summit in Beijing on May 14 and 15. Markets are nervous heading into it. Investors are pulling back from risk ahead of potential announcements on trade tariffs, technology restrictions, and broader tensions between the two largest economies in the world. If









