Oil Prices Surge as U.S.-Iran Conflict Escalates and Strait of Hormuz Risks Grow 
Dollar Eases as Middle East Conflict, Fed Outlook and Japan Pension Policy Drive FX Markets 
Australia Consumer Sentiment Rises in July as Fuel Price Relief Lifts Confidence 
Asian Currencies Weaken as Stronger Dollar Weighs, Yen Supported by GPIF Repatriation Hopes 
Gold Price Holds Near Record High as Cooling U.S. Inflation Offsets Fed Caution 
Gold Price Holds Near $4,000 as Middle East Tensions and Fed Rate Hike Bets Grow 
China Home Prices Fall Again in June Despite Slower Pace of Decline 
Australian Business Conditions Hold Steady as Easing Cost Pressures Face New Oil Price Risks 
US-Iran Strikes Escalate as Strait of Hormuz Crisis Pushes Oil Prices Higher 
Gold Prices Fall as US-Iran Conflict, Rising Oil Prices Fuel Fed Rate Concerns 
South Korea’s KOSPI Enters Bear Market Despite Remaining 2026’s Best-Performing Major Stock Index 
Goldman Sees Foreign Investors Driving India Stock Market Recovery 
Japanese Yen Holds Steady as Intervention Hopes Grow Ahead of U.S. CPI Data 
China Q2 2026 GDP Misses Forecast as Weak Domestic Demand Offsets Export Strength 
Oil Prices Climb as Trump Escalates Iran Pressure, Strait of Hormuz Risks Grow 
US Inflation Expected to Ease in June, but Fed Rate Hike Risks Persist Amid Middle East Tensions 
Dollar Rises as Middle East Conflict Fuels Inflation and Rate Hike Fears 
The U.S. dollar weakened on Wednesday after retreating from a two-week high as weaker-than-expected U.S. inflation data reduced expectations that the Federal Reserve will raise interest rates in the near term. While easing price pressures boosted risk sentiment across currency markets, rising oil prices linked to escalating tensions in the Middle East continued to fuel concerns over future inflation.
The dollar slipped 0.1% against the Japanese yen to 162.08. Meanwhile, the euro climbed 0.1% to $1.1433, and the British pound also gained 0.1% to trade at $1.3401. Commodity-linked currencies remained firm, with the New Zealand dollar hovering near a one-month high at $0.5819, while the Australian dollar held steady at $0.6983.
The U.S. Dollar Index, which tracks the greenback against six major currencies, eased to 100.81 after falling 0.35% in the previous session, marking its largest daily decline in nearly two weeks.
Fresh economic data showed U.S. consumer inflation slowed to 3.5% year over year in June, while the headline Consumer Price Index fell 0.4% from the previous month, the first monthly decline since April 2020 as energy prices eased. The softer inflation report pushed U.S. Treasury yields lower, with two-year yields dropping nine basis points from a 16-month high.
According to OCBC FX strategist Sim Moh Siong, the weaker inflation reading gives the Federal Reserve greater flexibility to keep interest rates unchanged for longer. He added that although the bank still expects modest U.S. dollar strength by year-end, near-term gains may remain limited without new market catalysts.
Following the inflation report, traders sharply reduced expectations for a July Fed rate hike, with CME Fed funds futures indicating the probability dropped to just 16%.
However, Federal Reserve Chair Kevin Warsh maintained a cautious stance during testimony before the House Financial Services Committee, stressing that the central bank has “no tolerance” for persistently high inflation. At the same time, renewed U.S. military action against Iran and President Donald Trump's reinstatement of a naval blockade on Iranian ports pushed oil prices to one-month highs, keeping inflation risks firmly on investors' radar.
Markets are now closely watching upcoming U.S. producer price data for additional clues on the Federal Reserve’s next policy move.
