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Dollar steadies as Iran ceasefire hopes fade and oil jumps

Brent rose to $78.4 over two sessions, lifting rate-hike expectations and weighing on eurozone core bonds as EUR/USD hovered near 1.14.

Reported · Written up by our desk · Major Pairs

Action Forex said US comments indicating the US-Iran ceasefire is effectively over came after Washington revoked a sanctions waiver for Iranian oil sales and hit several Iranian sites in response to Iran targeting three commercial ships that did not follow the Iranian designated route.

Markets reacted sharply through energy and rates, with Brent rising to $78.4 after bottoming out early July and core government bonds selling off, particularly in Europe and at the front end of the curve.

Money markets moved forward expectations for a second ECB rate hike from December to October, with September implied at an 85.0% probability. German yields were higher, with rises cited at 4.8 basis points on the 30-year and 8.0 basis points on the 2-year, while spreads between OAT and swaps widened.

On currencies, Action Forex reported the US dollar gains were “far from convincing” amid a sour risk mood. EUR/USD was near the 1.14 area, DXY was testing around 101, and USD/JPY climbed toward the 40-year high set July 1 at 162.84, with the pair at 162.6 cited.

Latest closeBrent $78.44 ▲5.8%|EUR/USD 1.143 ▼0.1%|USD/JPY 162.49 ▲0.2%

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