The dollar index (DXY00) today is down -0.09 (-0.09%) on the dovish US PPI report, which caused the odds for a Fed rate hike in September to drop to 35% from 40% on Wednesday. In addition, the 10-year T-note yield is down -7 bp, undercutting the dollar's interest rate differentials.
The dollar is also being undercut by reduced safe-haven demand as there were no overnight reports of new military attacks by the US or Iran in the Persian Gulf. Market concerns about the Middle East were also reduced slightly by news reports saying that the Trump administration is pivoting to using the naval blockade to apply economic pressure on Iran rather than new military attacks. There are no reports of any progress between the US and Iran on an agreement to reopen the Strait of Hormuz, although some ships are still getting through by turning off their transponders and hoping for the best.
