Bank of America: The US dollar's safe-haven appeal is in full swing, making the non-farm payroll report secondary.

The US dollar is experiencing its best week in over a year, strengthening as the ultimate safe haven amid Middle East conflict and soaring oil prices. As of this writing, the spot dollar index is up 1.5% this week, its biggest gain since the end of 2024. Hostilities are disrupting oil production and shipping, and exacerbating inflation concerns at the Federal Reserve and other central banks. This has led traders to reduce their bets on a Fed rate cut, further pushing up the dollar. Adding to the economic backdrop, a report on Friday showed that US employers unexpectedly cut jobs last month. However, with the focus primarily on energy prices, the data only briefly weighed on the dollar, which quickly resumed its gains, and the benchmark 10-year Treasury yield climbed for the fifth consecutive day. "In this environment, the market is seeing through weak data, as continued uncertainty and oil prices at new highs are the overwhelming dominant drivers," said Alex Cohen, a foreign exchange strategist at Bank of America. (Jinshi)