Dollar Falls Amid Reduced Expectations for Rate Hike
The US Dollar Index (DXY) has been declining, falling to its lowest level since late May. This decline is attributed to traders reducing their bets on a Federal Reserve interest rate hike, despite ongoing tensions in the Middle East.
The DXY currently trades near 98.80 in early European trading hours on Thursday. Markets are now pricing a 32.7% probability of a Fed rate hike at the September policy meeting, down from 47% a month earlier.
The US Treasury's expansion of bond buyback operations and concerns over national debt surpassing $40 trillion also contribute to the DXY's decline. Meanwhile, the ongoing US-Iran conflict and uncertainty surrounding the Strait of Hormuz could boost the safe-haven currency, but markets are reluctant to push the Dollar decisively higher.