U.S. Dollar Ticked Higher As Tumbling Crude Oil Prices Ease Inflationary Pressures

(RTTNews) - The U.S. Dollar value ended roughly flat with simmering gulf tensions due to Iran's hard stance offering upside support while reducing U.S. interest rate concerns following a plunge in crude oil prices exerted downwards pressure.

Today, the U.S. Dollar Index DXY which measures the Greenback against a basket of other major currencies was last seen trading at 99.96, up by 0.05 (or 0.05%).

On the data front, according to S&P Global, in the U.S., the Purchasing Managers' Index for the manufacturing sector was revised slightly higher to 53.90 in July from the preliminary estimate of 53.80, matching June's reading. The data indicated yet another month of robust factory activity expansion.

Meanwhile, the PMI from the Institute for Supply Management rose to 55.60 in July from 53.30 in June, beating market expectations of 54.00, again revealing a strong expansion in factory activity since May 2022.

ISM manufacturing employment increased to 52.80 in July from 49.70 in June.

While against the Euro, the USD was trading at 1.151, up by 0.17%, against the GBP, the USD was trading at 1.343, up by 0.33%.

Against the USD, the Japanese Yen was trading at 157.194, up by 0.17%, the Swiss Franc was trading at 0.810, down by 0.44%; and the Canadian Dollar was trading at 1.404, down by 0.25%.

Against one unit of Australian Dollar, the USD was trading at 0.700, up by 0.36%.

In the ongoing Middle East crisis, last Friday, Trump warned that U.S. forces were ready to hit Iran very hard to the point they cannot take anymore.

Late Saturday, Trump announced through social media platform Truth Social that he was calling off the strikes at the request of Iran along with the leaders of Qatar, Saudi Arabia, and the United Arab Emirates.

Trump stated that he was assured that the outlines of a deal have been accepted by Iran but warned that the halt on attacks is subject to Iran rapidly making a deal.

Later on Sunday, aboard Air Force One, Trump stated that the planned attack which he called off was on a scale never seen before since the World War II.

Trump confirmed that by Monday afternoon, a fresh round of talks was set to begin. However, Iran's semi-official Mehr news agency cited Iran's Foreign Ministry as refuting Trump's claims.

Despite Iran's denial, triggered by expectations of peace talks, crude oil prices began to tumble, thereby easing oil-linked inflation concerns.

Through Truth Social, Trump accused Iranian leadership of being duplicitous, and claimed that the U.S. is in control of the Strait of Hormuz.

NBC News reported Trump as stating that U.S. had "many talks" with Iran and re-confirmed that the U.S. is still engaged in talks with Iran.

Trump remarked that Iran does not like to explicitly state that that they are talking with the U.S. In a warning of sorts, Trump stated that this is the last chance for Iran to settle the issues.

Despite conflicting claims by the U.S. and Iran about the Hormuz seaway and peace talks, the possibility of resumption of shipping traffic led to a sharp plunge in crude oil prices which lowered inflationary concerns.

In the foreign exchange market, after the Japanese Yen hit a 40-year low, the U.S. stepped in to boost Yen in a coordinated move.

The Federal Reserve Bank of New York sold the Euros to buy the Yen.

U.S. Treasury Secretary Scott Bessent expressed willingness to intervene further if needed.

According to the CME Group's FedWatch Tool, investors are betting on a 64.50% chance of a 25-basis-point interest rate hike in 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 35.50%.