In the oil market, prices eased on a weaker demand outlook following a surprise build in U.S. crude stocks and lower consumption forecasts from OPEC and the International Energy Agency. U.S. crude pared earlier losses to trade 0.37% lower at $82.96 a barrel, while Brent slipped 0.2% to $88.80.
Iran and the U.S. remained at loggerheads over efforts to agree a permanent end to the war in the Gulf, with talks to revive a June interim agreement making no headway and no timetable set for its implementation, a senior Iranian source said.
President Donald Trump said the U.S. has "total control" over the Strait of Hormuz, a claim swiftly rejected by Iran, which said the route remained blocked.
Against the yen, the dollar softened 0.04% to 159.33, amid growing speculation that the Bank of Japan would hike interest rates next month, earlier than the previously expected December timeline. Those expectations were reinforced by Japan's producer price index, which rose 7.2% in July from a year earlier, highlighting broadening price pressures.
Bloomberg News reported Prime Minister Sanae Takaichi’s government is supportive of a near-term rate hike, with the next move likely either in September or October, citing people familiar with the matter. The dollar/yen pair barely reacted to the report.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was steady at 99.96 but was on course for a weekly rise of 0.36%.
The yield on benchmark U.S. 10-year notes fell 1.37 basis points to 4.678%, from 4.692% late on Wednesday.
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