The dollar index held steady just above 101 on Wednesday, trading near one-week highs as investors weighed a fresh escalation in Middle East tensions. US President Trump declared that “as far as I’m concerned, the ceasefire is over,” while Washington launched new strikes on Iran and revoked a waiver that had allowed Tehran to sell crude on global markets. These moves followed a series of recent attacks on tankers passing through the Strait of Hormuz.
Oil prices jumped again, bringing cumulative gains over the past two sessions to nearly 10% and reigniting worries about inflation and the risk of further monetary tightening. In response, traders increased their expectations for additional Federal Reserve rate hikes, with the implied probability of a September increase rising to about 70%, up from 58% the day before. Market participants now look to the upcoming FOMC meeting minutes for further insight into the Fed’s policy outlook.
