U.S. Dollar Advances Amid U.S.-Iran Attacks, Strait Of Hormuz Closure

(RTTNews) - The U.S. Dollar value edged higher as U.S. and Iran engaged in a military confrontation over the weekend with Iran shutting the Strait of Hormuz, bringing back crude oil supply-related concerns and consequent inflationary threats.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 101.31, up by 0.36 (or 0.36%) today.

While against the Euro, the USD was trading at 1.138, up by 0.31%, against the GBP, the USD was trading at 1.334, up by 0.39%.

Against the USD, the Japanese Yen was trading at 162.461, down by 0.49%, the Swiss Franc was trading at 0.815, down by 0.89%; and the Canadian Dollar was trading at 1.416, down by 0.05%.

Against one unit of Australian Dollar, the USD was trading at 0.692, up by 0.47%.

Putting the June 17 Memorandum of Understanding to test, a flare-up in the U.S.-Iran hostilities rekindled uncertainty in the Middle East crisis.

Iran's Islamic Revolutionary Guards Corps fired on a Cyprus-registered boxship passing through the Strait of Hormuz.

The vessel caught fire, forcing the crew to abandon it and escape through lifeboat. One Indian crew member is reportedly missing.

Iran claimed that the vessel was navigating through an unauthorized route.

Quickly, U.S. forces hit back on Iran with U.S. Central Command stating that it hit nearly 140 Iranian military installations.

In retaliation, Iran launched a barrage of missiles and drone attacks targeting U.S. bases in Jordan, Qatar, the United Arab Emirates, Bahrain, and Oman.

While Iran announced closing the Strait of Hormuz, in an interview on NBC's Meet the Press, U.S. President Donald Trump reaffirmed that the Strait of Hormuz is open to commercial traffic. Trump reinstated the blockade on ships entering or exiting Iran across the Strait of Hormuz.

U.S. Central Command confirmed Trump's statement and announced that U.S. forces are prepared to ensure freedom of navigation.

While Trump expressed plans to take control of the strait and charge a toll for all ships passing through the channel, Iranian Foreign Minister Abbas Araghchi reaffirmed that Iran has always been the guardian of the strait and will remain so forever.

Driven by fear of strikes and doubts over the Strait of Hormuz management, shipping traffic across the strait dipped in the past two days.

According to maritime intelligence firm Kpler, there were only 14 crossings across the strait on Sunday, reportedly the lowest in a month. The report, however, concedes that more vessels could have transited through "dark routes", switching off their visibility.

Still, from July 10 to 12, confirmed crossings declined by nearly 52% week on week.

Oil prices skyrocketed due to supply-related concerns. WTI crude oil for August month delivery was last seen trading at $77.79, up by $6.38 (or 8.93%).

The upcoming U.S. CPI and PPI reports and U.S. Federal Reserve Chair Kevin Warsh's testimony before Congress are awaited by investors for more clues on the central bank's policy path.

As oil price surge sparked inflationary concerns, currently investors are betting on a 43.30% chance of a quarter-basis-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on July 28-29 while the bets on rates being held at the current level stand at 56.70%, according to the CME Group's FedWatch Tool.