- US Dollar Index declines on fading safe-haven demand as a US-Iran deal eases inflation and interest rate concerns.
- Washington and Tehran announced Sunday they have reached a peace agreement, which will officially take effect this coming Friday.
- The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground and trading around 99.50 during the Asian hours on Monday. The Greenback declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.
Iran’s National Security Council confirmed a ceasefire agreement with the US, adding that final deal talks will start after the other party fulfills commitments under the memorandum of understanding. Iranian officials said the maritime blockade against Iran should end immediately and entirely.
The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.
