US Dollar Index softens to near 99.00 as Trump agrees to two-week ceasefire, FOMC Minutes loom
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.05 during the Asian trading hours on Wednesday. The DXY tumbles after US President Donald Trump agrees to a two-week ceasefire after threatening massive attacks.
Trump said late Tuesday that he had agreed "to suspend the bombing and attack of Iran for a period of two weeks” on the condition that Iran reopens the Strait of Hormuz. Meanwhile, Iran’s Foreign Minister Abbas Araghchi said safe passage through the key waterway will be possible for a period of two weeks via coordination with Iranian armed forces.
Traders will closely monitor the developments surrounding the ceasefire. The US and Iran will meet in Islamabad, Pakistan, on Friday to finalize details. Any signs of easing tensions could weigh on the US Dollar as a safe-haven asset.
The Federal Open Market Committee (FOMC) Minutes will be in the spotlight later on Wednesday. The report could offer more cues on officials' views on the recent energy shock caused by conflicts in the Middle East.
Any hawkish remarks from Federal Reserve (Fed) officials could support the USD against its rivals in the near term. Meanwhile, overnight-indexed swaps signaled an about-40% probability of a Fed rate cut by the year-end, according to the CME FedWatch tool.
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