USA: Dollar Little Changed, Middle East Situation in Focus.

The dollar index was little changed at around 100.9 on Friday and was also on track to end the week largely unchanged, as traders continued to assess the fragile and uncertain situation in the Middle East. Oil prices eased after surging earlier in the week, following reports that the US and Iran would continue peace negotiations. However, renewed exchanges of strikes between the two countries raised concerns that the conflict could escalate further, with the status of the previous truce remaining uncertain. The renewed hostilities also revived fears of another wave of inflationary pressure, reinforcing expectations that the Fed may need to tighten monetary policy. Markets currently assign a 62% probability of a Fed rate hike in September, up from 58% a week ago but down from around 70% earlier this week. Meanwhile, New York Fed President John Williams said that, among the factors driving inflation in the US, he is most concerned about demand fueled by AI.