Markets price a 27% chance of a December Fed rate hike after Washington and Tehran agree to end hostilities, easing inflation fears.
The US Dollar Index (DXY) fell to 99.50 in early Asian trading Monday as safe-haven demand waned following a US-Iran agreement to end their conflict. The deal, set to take effect Friday, includes lifting a naval blockade and sanctions in exchange for Iranian nuclear concessions.
A week ago, markets priced a 40% probability of a December Federal Reserve rate hike, but the CME FedWatch tool now shows a 27% chance. The shift reflects reduced concerns over inflation and supply chain disruptions from geopolitical tensions.
The UK, France, Germany, and Italy signaled readiness to lift sanctions on Iran, while Tehran demanded an immediate end to the maritime blockade. The agreement follows a ceasefire confirmed by Iran’s National Security Council.