U.S. Dollar Ticks Higher As Prospects Of Peace Surface Despite Intense U.S.-Iran Attacks

(RTTNews) - The U.S. Dollar value ends nearly flat as investors held back from big moves due to inflationary concerns following U.S.-Iran exchange of attacks. Tensions eased partially after both nations expressed readiness to pursue diplomacy.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 100.75, down by 0.04 (or 0.04%) today.

The University of Michigan's Consumer Sentiment Index increased to 54.40 in July, exceeding expectations of 51.00, marking a second straight monthly increase, according to the preliminary estimate.

While against the Euro, the USD was trading at 1.143, up by 0.04%, against the GBP, the USD was trading at 1.345, up by 0.16%.

Against the USD, the Japanese Yen was trading at 162.395, down by 0.01%, the Swiss Franc was trading at 0.807, up by 0.16%; and the Canadian Dollar was trading at 1.402, up by 0.16%.

Against one unit of Australian Dollar, the USD was trading at 0.698, up by 0.23%.

In the renewed U.S.-Iran conflict, today U.S. forces launched new strikes on Iran for the sixth consecutive day.

Iran accused the U.S. of targeting civilian infrastructures and energy installations besides hitting military logistics infrastructure and maritime assets.

Iran was forced to ask its citizens to reduce using electricity after the U.S. attacks inflicted severe damages to energy facilities.

In retaliation, Iran targeted U.S. bases in Kuwait, Jordan, Bahrain, and Qatar. Notably, in Kuwait, desalination and electricity plants sustained destruction.

After Iran announced the closure of the Strait of Hormuz, shipping traffic dwindled over the past few days as seafarers feared attacks and refrained from transits.

The geopolitical risk premium on crude oil moved its prices on the upside and triggered inflationary concerns which supported the dollar.

Currently, investors are betting on a 14.40% 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 odds on rates being held at the current level stand at 85.60%, according to the CME Group's FedWatch Tool.

Even as the conflict intensifies, expectations of a peaceful solution to the crisis were kept alive after the White House Spokesperson Karoline Leavitt announced that U.S. President Donald Trump was open to diplomacy. She also acknowledged that the U.S. is in talks with Iran.

Similarly, yesterday Iran's Parliamentary Speaker Mohammad Bagher Ghalibaf stated that doors are open for talks and asserted that negotiations at this stage does not mean capitulation.

Experts are of the view that the U.S. is adopting a hybrid approach with measured military attacks on Iran while mobilizing talks with the nation in parallel to pressure Iran to accept a deal.