The dollar index hovered near 101 on Monday after two consecutive sessions of gains, bolstered by escalating tensions in the Middle East that pushed oil prices higher and intensified worries about inflation and the likelihood of further interest rate increases. The US military reported new airstrikes against Iran on Sunday following the deaths of three American service members, while Tehran announced that its ceasefire with Washington had effectively collapsed and said it had intercepted four vessels transiting the Strait of Hormuz over the weekend.
On the policy front, Cleveland Fed President Beth Hammack on Friday joined a growing number of Federal Reserve officials cautioning that inflation remains stubbornly high. Interest rate futures now imply roughly a 53% probability of a Fed rate hike in September, up from 47% the previous day, although the central bank is still widely expected to leave rates unchanged at this month’s meeting.
