Forex News: U.S. Dollar Slides As Near-Term Rate Hike Expectations

U.S. Dollar Slides As Near-Term Rate Hike Expectations Fade

(RTTNews) - The U.S. Dollar value inches lower amid recent softer economic data which lowered expectations of a near-term rate hike by the U.S. Federal Reserve while the U.S. switches to pressure Iran through economic measures instead of military campaign, thereby reducing safe-haven demand. The U.S. retail sales data indicating a dip pressured the dollar further.

Today, the U.S. Dollar Index DXY which measures the Greenback against a basket of other major currencies was last seen trading at 99.64, down by 0.28 (or 0.28%).

While against the Euro, the USD was trading at 1.157, down by 0.34%, against the GBP, the USD was trading at 1.353, down by 0.36%.

Against the USD, the Japanese Yen was trading at 159.320, up by 0.10%, the Swiss Franc was trading at 0.813, up by 0.06%; and the Canadian Dollar was trading at 1.387, up by 0.41%.

Against one unit of Australian Dollar, the USD was trading at 0.708, down by 0.34%.

In the Middle East conflict between the U.S. and Iran, last week, Iranian Security Chief Mohammad Bagher Zolghadr laid out a list of conditions for reopening the strait, among which Iran wanted compensation for war-time damages.

Mocking Iran, U.S. President Donald Trump, in return, demanded compensation from Iran for all the loss of lives and properties linked to several conflicts Iran had had with various countries in the past five decades.

Trump stated that he preferred to force Iran by exerting economic pressure rather than pursuing military offensives.

In an interview with Newsmax, U.S. Treasury Secretary Scott Bessent stated that the U.S. administration is set to announce new measures to push Iran into an unprecedented level of economic isolation.

Bessent stated that the military campaign against Iran, which U.S. President Donald Trump termed as "Operation Epic Fury", has now turned into an "Economic Fury" against Iran.

While Trump announced that the U.S. has full control over the Strait of Hormuz, Iran fiercely denied his claims.

Meanwhile, two tankers owned by Abu Dhabi National Oil Company of the United Arab Emirates came under drone attacks while transiting through the Strait of Hormuz. The U.A.E. government accused and condemned Iran for the strikes.

On Friday, the United Kingdom Maritime Trade Operations reported two identical incidents of drone strikes on tankers in Hormuz a day earlier. However, it is unclear if the UKMTO mentions the same attacks.

In an interview on Fox News Channel's "The Will Cain Show", U.S. Vice President JD Vance clarified that the war was aimed at ensuring free and safe flow of oil and gas from the Arabian countries to the rest of the world and also to disable Iran from possessing or developing any nuclear weapon.

Late Friday, escalating his rhetoric over the vital waterway that carries a significant share of global oil supplies, Trump stated that he would be soon declaring the Strait of Hormuz, a U.S. territory.

The nonfarm payrolls data released last week indicated a fall by 23,000 in July compared to predictions of an 80,000 increase.

Today, the data provided by the U.S. Census Bureau revealed that retail sales fell 0.60% month-on-month in July, and reversing June's 0.20% gain, sharply missing expectations for a 0.10% rise and increased 5.00% year-on-year in July, following an upwardly revised 6.80% gain in June.

The University of Michigan's consumer sentiment index fell to 51.00 in early August, down from 55.20 in July and below market expectations of 54.50, ending two consecutive months of improvement.

Following recent soft U.S. inflation numbers and a weak jobs report, investors have trimmed their interest rate hike expectations considerably.

According to the CME Group's FedWatch Tool, traders are betting on only a 32.50% chance for a 25-basis-point interest rate hike by the U.S. Federal Reserve on its upcoming meeting on September 15-16.

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