The dollar index (DXY00) is down -0.41% as the weak US retail sales and consumer sentiment reports reduced the odds of a September Fed rate hike to 29% from 35% on Thursday. The dollar was also undercut by today’s -1.3 bp drop in the 2-year T-note yield, although the 10-year T-note yield rose +1.8 bp.
The dollar was also undercut by reduced safe-haven demand as President Trump appears to have given up on plans for any new major military attack on Iran for the time being, favoring economic pressure instead. Treasury Secretary Bessent said the administration will soon announce unprecedented economic measures against Iran that “have never been seen in the history of economic isolation of a country.” Yet, the military conflict continues as there were reports that Iran attacked two Abu Dhabi oil vessels in the Strait of Hormuz on Thursday night.
