Dollar firms as US-Iran tensions renew oil price risk
SPY•Fed, ECB and Japan rate expectations keep currencies in focus
The U.S. dollar index =USD, which tracks the currency against six peers, rose 0.31% to 100.76, off its lowest since June 18 but still on track for a weekly decline.
Chances for a Fed hike in July stood at 10%, versus a 45% implied probability at the start of the week. Markets see 48% odds of at least a 25 basis-point increase in September, according to Fed funds futures prices via CME Group.
ECB rate path in focus
The euro fell 0.23% to $1.1437 EUR=EBS, ending its two-day winning streak. Investors are closely monitoring European gas futures TFMBMc1, which have risen to their highest levels since March, stoking concerns that higher energy costs could weigh on the euro zone economy and limit further appreciation of the euro.
The European Central Bank is seen as more hawkish than the Fed, with markets betting on two additional rate hikes into 2027 and some economists not ruling out a first move next week.
