Dollar Weakness as Risk Flows Dominate Markets Amid Middle East Optimism

The US dollar is struggling as risk flows dominate markets on Wednesday, August 5. Investors are optimistic about a diplomatic solution to the conflict in the Middle East, which has led to increased volatility in financial markets.

Crude oil prices declined sharply on Tuesday after news that activity in the Strait of Hormuz would resume, but the barrel of West Texas Intermediate (WTI) stabilized at around $74 early Wednesday. US President Donald Trump reiterated that the Strait of Hormuz would be 'reopened soon' or that they would launch a new attack on Iran.

The Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) report for July will be featured in the US economic calendar later in the day. The data is expected to provide insight into the state of the US economy and may impact market sentiment.