The dollar index (DXY) rose 0.03% after hitting a one-week low, driven by safe-haven demand amid ongoing tensions in the Middle East, particularly Iran’s vow to retaliate against recent U.S. attacks. Meanwhile, swaps markets are indicating a 24% probability of a 25 basis point interest rate hike at the upcoming FOMC meeting on July 28-29.
The euro (EUR/USD) fell 0.03% today, pressured by a stronger dollar and a disappointing Italian industrial production report showing a 0.3% month-over-month decline in May, more than the expected 0.2%. The likelihood of a European Central Bank rate hike is currently estimated at 11% for its next meeting on July 23.
In Japan, the yen (USD/JPY) saw a decline of 0.38% against the dollar after Finance Minister Satsuki Katayama indicated a push for pension funds to invest more domestically. Additionally, June’s Producer Price Index rose by 7.1% year-over-year, surpassing expectations of 6.8%, amidst speculation of a potential interest rate hike by the Bank of Japan set for July 31, where the odds are at 2%.
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