Dollar Holds Steady as Oil Slump Reduces Fed Rate Hike Bets

2026-08-04 14:44 By Joana Ferreira 1 min. read

The dollar index hovered around 100 on Tuesday, while US Treasury yields declined as oil prices tumbled on growing optimism that diplomatic efforts could bring an end to the US-Iran conflict, prompting investors to scale back expectations for a Federal Reserve interest rate hike in September.

Qatar said mediators were making progress in negotiations, while Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday.

Investors also assessed a fresh batch of US economic data.

Job openings fell more than expected to 7.36 million in June, the trade deficit narrowed as imports declined more than exports, and factory orders unexpectedly fell 0.3%, marking a second consecutive monthly decline.

The developments pushed the implied probability of a September Fed rate hike down to 57%.

Markets now turn their attention to the ADP employment report and Friday's nonfarm payrolls for further clues on the Fed's policy outlook.



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Dollar Holds Steady as Oil Slump Reduces Fed Rate Hike Bets
The dollar index hovered around 100 on Tuesday, while US Treasury yields declined as oil prices tumbled on growing optimism that diplomatic efforts could bring an end to the US-Iran conflict, prompting investors to scale back expectations for a Federal Reserve interest rate hike in September. Qatar said mediators were making progress in negotiations, while Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday. Investors also assessed a fresh batch of US economic data. Job openings fell more than expected to 7.36 million in June, the trade deficit narrowed as imports declined more than exports, and factory orders unexpectedly fell 0.3%, marking a second consecutive monthly decline. The developments pushed the implied probability of a September Fed rate hike down to 57%. Markets now turn their attention to the ADP employment report and Friday's nonfarm payrolls for further clues on the Fed's policy outlook.
2026-08-04
Dollar Steadies as Markets Assess Fed Outlook
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