FX.co ★ Dollar Edges Higher on US-Iran Tensions

The dollar index climbed above 99.3 on Thursday, approaching a seven-week high, as reports of fresh US strikes on an Iranian military facility darkened the outlook for a peace agreement and kept inflation and interest rate concerns elevated. Tensions between Washington and Tehran remained high, with the two sides still divided over critical issues, including Iran’s insistence on maintaining control of the Strait of Hormuz and preserving its nuclear program. At the same time, President Donald Trump said he was “not satisfied” with the progress of negotiations and dismissed reports that Iran and Oman might jointly supervise shipping through the Strait of Hormuz. Investors are now turning their attention to the upcoming release of the PCE price index, the Federal Reserve’s preferred inflation gauge, for additional signals on the trajectory of US interest rates. Futures markets currently imply roughly a 50% probability of a Fed rate hike by December.