China Inflation Cools in July as CPI Misses Forecast, PPI Deflation Eases 
US Dollar Near Two-Month Low as Markets Await Inflation Data 
Japan Executives Warn Weak Yen and Currency Volatility Threaten Economy 
Iran-Oman Near Strait of Hormuz Deal as Shipping Tensions Persist 
US Dollar Gains as Iran Tensions, Fed Rate Hike Bets Rise 
South Korean Won Leads Asian FX Losses as Dollar Rises 
US Yen Intervention Unlikely to Deliver Lasting Recovery, Yardeni Says 
Canada, US Hold Constructive Trade Talks as Tariff Negotiations Continue 
US Stock Futures Flat as Iran Strait of Hormuz Demands Fuel Oil Concerns 
BOJ Rate Hike Expectations Rise Ahead of September Meeting 
Asian Currencies Steady as Markets Await U.S. Jobs Data 
US Job Growth Seen Picking Up in July 
Japan Posts First Current Account Deficit in 17 Months as Dividend Payments Surge 
Australian Shares Fall as Westpac Slides, Miners Gain Ahead of RBA Decision 
Goldman Sachs Sees US Stock Buybacks Outpacing Equity Issuance as AI Funding Rises 
S&P 500, Nasdaq Futures Rise as Iran Risks and CPI Loom 
The U.S. dollar climbed to its strongest level in more than a year on Monday as investors increased bets on tighter Federal Reserve policy, outweighing the impact of easing oil prices and diplomatic developments in the Middle East.
The U.S. Dollar Index, which measures the greenback against six major currencies, rose 0.2% to 101.02, reaching its highest level since May 2025. The rally was fueled by growing expectations that the Federal Reserve could keep interest rates higher for longer in response to persistent inflation concerns.
Markets were caught off guard last week after the Federal Reserve released a more hawkish-than-expected Summary of Economic Projections. The updated outlook showed that many policymakers now anticipate potential interest rate hikes rather than the previously expected rate cuts. Bank of America further reinforced this sentiment by forecasting that the Fed may not begin cutting rates until 2028.
Federal Reserve Chair Kevin Warsh also boosted expectations for tighter monetary policy after outlining significant changes to the central bank’s operations and reaffirming its commitment to controlling inflation. As a result, U.S. Treasury yields moved higher, with the two-year Treasury yield rising to 4.232% and the benchmark 10-year yield reaching 4.512%.
According to analysts, the flatter yield curve suggests investors believe aggressive rate increases could eventually slow economic growth, even as inflation remains a concern.
Meanwhile, oil prices continued their decline after reports of progress in U.S.-Iran peace negotiations. Discussions held in Switzerland focused on maintaining open access to the Strait of Hormuz, a critical global energy shipping route. Although tensions remain after recent clashes involving Israel and Iran-backed groups, investors welcomed signs of diplomatic engagement.
In the United Kingdom, the British pound remained in focus following Prime Minister Keir Starmer’s announcement that he would resign. Sterling recovered from earlier losses and edged 0.1% higher to $1.3249. Markets largely shrugged off the political shock, with investors viewing potential successor Andy Burnham as likely to maintain fiscal stability.
Despite ongoing geopolitical uncertainty and political changes in the UK, expectations of higher U.S. interest rates continued to dominate currency markets, helping the dollar extend its gains against major global currencies.
