Dollar Weakness Amid Iran Attacks and Japan Pension Fund Concerns

The dollar weakened on Monday amid concerns over renewed Iranian hostilities and reports that Japan has no immediate plans to alter state pension fund asset allocations. The dollar index fell 0.2% to 100.83, while the yen rose to 162.05. Rising oil prices and continued U.S. strikes on Iranian targets supported the greenback, though Japan's financial policies uncertainty contributed to yen weakness. Thomas Mathews of Capital Economics noted, 'The dollar may not gain as much this time if the situation worsens.' Fed funds futures now imply a 50% probability of two or more rate hikes by the December meeting. Upcoming CPI and PPI data, along with Fed Chair Kevin Warsh's testimony, will keep markets focused.