05.08.202602:21:21UTC+00Dollar Pressured by Hormuz Deal Prospects

The dollar index stayed below the 100 mark on Wednesday, facing renewed pressure after reports of an imminent interim agreement between the US and Iran to reopen the Strait of Hormuz sent oil prices sharply lower. The decline in oil eased inflation concerns and reduced expectations for further interest rate hikes. On Tuesday, Qatar said an interim proposal had been prepared, while both Washington and Tehran indicated progress in talks to restore access through Hormuz. US Treasury Secretary Scott Bessent also noted that a deal could be reached as early as Tuesday or Wednesday. As a result, markets trimmed the implied probability of a Federal Reserve rate hike in September to about 57%, down from 67% the previous day. Investors are now awaiting a series of US labor market indicators for further guidance on the Fed’s policy path, with ADP’s July private payrolls data due later today. Meanwhile, the dollar extended its losses against the yen after both the US and Japan reiterated that they stand ready to intervene again in currency markets if needed.