US Dollar Steady Amid Global Political Turmoil, Safe-Haven Demand

The US dollar has remained firm and steady amid ongoing political uncertainties, including the US government shutdown and political upheavals in Japan and France, which have weakened the yen and euro respectively. The appointment of Sanae Takaichi as Japan's new LDP head signals continued loose monetary policy, pressuring the yen, while turmoil in France has unsettled the euro. The US dollar index (DXY) has gained about 0.7% this month, supported by safe-haven flows as investors navigate geopolitical risks and uncertainty around Federal Reserve rate cuts. Markets are pricing in a high probability of Fed rate cuts later this year, although some policymakers urge caution due to inflation concerns, and Fed officials' speeches are being closely watched for guidance. Meanwhile, the Reserve Bank of Australia remains cautious amid sticky services inflation and rising consumer inflation expectations, supporting the Australian dollar's recovery against the US dollar. Despite challenges, the dollar's safe-haven status remains intact due to the depth of US capital markets and its "hard power," reinforced by US security guarantees.