Forex Today: Easing Fed rate hike bets weigh on USD amid Mideast stalemate
Here is what you need to know on Friday, August 14:
On Friday, August 14, the US Dollar (USD) faced pressure amid easing expectations of a Federal Reserve (Fed) rate hike, as tensions in the Middle East persisted. Investors analyzed second-quarter GDP growth data from Europe, and closely watched July retail sales and consumer sentiment reports from the United States. US producer inflation, as measured by the Producer Price Index (PPI), cooled to 4.7% in July, below the anticipated 4.9%.
The odds of a 25 basis points Fed rate hike in September dropped to around 33%, down from nearly 50% a week prior.
Commerzbank analysts emphasized that upcoming US data would be crucial for policy decisions, with Cleveland Fed President Beth Hammack pushing for the Fed to take action due to persistent inflation. US Treasury Secretary Scott Bessent announced stringent measures against Iran, while Defense Secretary Pete Hegseth stated the US could maintain its blockade "indefinitely."
Crude oil prices rose early Friday, reaching about $81.30, while the Bank of Japan (BoJ) was expected to raise interest rates in September and more aggressively afterward.
Despite these developments, the US Dollar struggled to gain traction, and the USD Index fell below 100.00 in the European session. Gold (XAU/USD) remained under pressure, trading below $4,350, while EUR/USD held steady around 1.1550. GBP/USD also showed signs of recovery, hovering near 1.3500. The Eurozone's Q2 GDP growth was forecast at 1%.
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