US Dollar (USD)

The dollar gained about 1.4% against a basket of six major currencies over the past month.

What is going on right now?

The dollar has strengthened recently, partly because tensions around the Strait of Hormuz, where Iran has increased strikes on ships, are pushing people toward currencies seen as safer in uncertain times.

What drives the dollar?

Two big things: the gap between what US government debt pays (the 10-year rate sits at 5.12%) and what other countries offer, and how fast prices are rising. Producer prices jumped 6.3% compared to a year ago, the biggest increase since 2022, while consumer prices hit a four-month high of 3.7%.

What stands out?

The US government's yearly shortfall is nearly $2 trillion, up about 12% in just one year. That growing gap between spending and income is unusually large.

What comes next?

Gold hit a record high on October 19 after expectations for another rate increase cooled. Whether those expectations shift again will show up directly in the dollar's strength.