Hormuz Tensions Ease; Dollar Remains Below 100
The US dollar index remained below the psychological 100 level during Asian trading on Wednesday. The DXY hovered around 99.85—near a six-week low—as falling oil prices eased inflation concerns and reduced the perceived need for Federal Reserve interest rate hikes.
Pressure on the dollar mounted following signs of progress in negotiations regarding the Strait of Hormuz. Qatar stated that a draft proposal had been circulated, while talks between Iran and Oman continued with input from the United States. However, no final agreement has been reached, and the risk of diplomatic failure remains.
The sharp drop in oil prices led markets to scale back expectations for a Fed rate hike in September. Based on recent developments, the probability of a rate hike fell to approximately 60%, down from around 75% previously. Declining Treasury yields also dampened the dollar's appeal.
The dollar also remained under pressure against the yen following coordinated intervention by the United States and Japan. The USD/JPY pair traded around 157.60—well below its July peak—as market participants remained wary of potential further intervention should the yen weaken sharply again.
Market focus now shifts to the ADP Non-Farm Employment Change report for July, scheduled for release today. The ADP report provides additional insight into private-sector labor conditions ahead of the official Non-Farm Payrolls (NFP) data, although ADP emphasizes that its figures are not a direct predictor of the US government's employment report.
Newsmaker Analysis: As long as the DXY remains below the 100.00–100.20 range, downward pressure on the dollar persists, with immediate support at 99.50, followed by 99.20. ADP data coming in weaker than expected could weigh on the dollar while supporting gold and the yen. Conversely, a strong result could push the DXY back above 100 and revive expectations for a Fed rate hike. (gn)
Source: Newsmaker.id
