U.S. Dollar Advances As Concerns Over Escalation In The Gulf Conflict Increase

(RTTNews) - The U.S. Dollar value edged higher as increasing crude oil prices due to persisting closure of the Strait of Hormuz boosted expectations of higher interest rates in the U.S. while the hard stance by the U.S. and Iran against each other renewed concerns of deeper escalation in the Middle East.

Today, the U.S. Dollar Index DXY which measures the Greenback against a basket of other major currencies was last seen trading at 99.67, up by 0.13 (or 0.13%).

While against the Euro, the USD was trading at 1.157, up by 0.03%, against the GBP, the USD was trading at 1.353, up by 0.09%.

Against the USD, the Japanese Yen was trading at 159.646, down by 0.13%, the Swiss Franc was trading at 0.813, down by 0.22%; and the Canadian Dollar was trading at 1.390, down by 0.17%.

Against one unit of Australian Dollar, the USD was trading at 0.708, up by 0.27%.

In the Middle East crisis, the Memorandum of Understanding signed between the U.S. and Iran to halt their mutual attacks for a 60-day period and resolve their disputes through negotiations, ended yesterday.

Investors were anticipating an extension of the truce agreement and expected an earlier reopening of the Strait of Hormuz.

However, over the weekend, U.S. President Donald Trump stated that the U.S. is not seeking for extension of the interim deal. He reiterated that though Iran wants a deal with the U.S., it could not come up with one that the U.S. would prefer to have.

Yesterday, in a telephone interview with Fox News, Trump mocked Iran asking it to put up a white flag of surrender. Trump asserted that direct backchannel talks with Iran's Islamic Revolutionary Guards Corps were underway. Trump threatened that the U.S. would bomb Oman if it gets in the way of U.S.-Iran talks.

Yesterday, citing a senior Iranian official, Reuters reported that Iran is offering only a few weeks to the U.S. to implement the terms agreed in the ceasefire agreement. The official stated that Iran is ready to launch a timely and precise attack to break the U.S. naval blockade on Iranian ports.

Today, through Truth Social Trump posted a map of the Hormuz region showing the crucial seaway as "NEW US territory".

Changing his previous stance, through Truth Social, Trump categorically stated that no negotiations are going on with Iran and none have been scheduled. Further, he added that the U.S. naval blockade on Iran is in full force and effect and the Strait of Hormuz is open and operative.

With uncertainty over the reopening of the Strait of Hormuz persisting, crude oil supply concerns and the subsequent need by the global major banks including the U.S. Federal Reserve to maintain high-interest rates continue to rise.

In the U.S., the data released by the U.S. Automatic Data Processing revealed today that the weekly employment change in the U.S. increased to 9,500 in August 1 from 8,250 in the previous week.

The Census Bureau data revealed that housing starts dropped by 12.40% from the previous month to a seasonally adjusted annualized rate of 1.239 units in July.

According to the Bureau of Labor Statistics, on a month-on-month basis, export prices fell 1.30% while year-on-year it rose 8.20%.

On the other hand, the import prices fell by 0.40% month-over-month in July while on a year-over-year basis, it rose by 5.90%.

The data from the National Association of Realtors revealed that pending home sales in the U.S. fell by 2.30% month-over-month in July and year-over-year it dropped by 2.20%.

Currently, investors have trimmed down their bets on a quarter-point-interest rate hike to a 34.60% chance at the upcoming meeting of the U.S. Federal Reserve on September 15-16 while the odds on rates being held at the current level stand at 65.40%, according to the CME Group's FedWatch Tool.