Dollar Weakens on US-Iran Deal Optimism
The US dollar index fell to around 99 on Thursday, off a six-week high, as optimism grew over a possible peace deal between the US and Iran. This outlook eased inflation concerns and expectations of interest rate hikes, while reducing safe-haven demand for the greenback.
President Trump stated that the US was in the final stages of negotiations with Iran, raising hopes that the strategic Strait of Hormuz could soon be reopened. The reopening of the shipping lane pressured oil prices, helping to ease inflationary pressures and lower expectations for the central bank to tighten policy.
However, minutes from the last Federal Reserve meeting showed that most policymakers considered additional interest rate hikes this year possible if inflation remained above its 2% target.
Markets generally still expect the Fed to keep rates unchanged for the remainder of the year, although traders currently assign a roughly 50% probability of a December rate hike.
This sentiment reflects a balance between geopolitical optimism and inflationary caution that could influence the direction of US monetary policy.
Key Points:
- The dollar weakened to around 99 after a six-week peak.
- Optimism over a US-Iran deal has reduced demand for safe-havens.
- The opening of the Strait of Hormuz has eased pressure on oil prices and inflation.
- Fed minutes indicate the possibility of an interest rate hike remains.
- The market believes the Fed will likely maintain interest rates until the end of the year. (asd)
Source: Newsmaker.id
