DXY Flat at 100.79 as Iran-Driven Oil Spike Meets Hawkish Fed Minutes

The Dollar Index sits at 100.79, down just 0.03% on the day — effectively flat. Wednesday's session was a genuine tug-of-war: hawkish Fed minutes from the June 16-17 FOMC meeting supported the dollar, while an Iran-driven oil shock stoked inflation fears that lifted rate-hike bets in Europe and the UK too, pulling other majors up against the dollar at the same time. President Trump said the Iran deal was "over" after US strikes and a revoked Iranian oil-export licence sent Brent crude up 3.23% to 78.31 and WTI up 2.17% to 73.76. Equities slipped (S&P 500 -0.42%, Dow -1.13%) and the VIX rose 2.94% to 17.84, while gold fell 0.98% and silver dropped 3.09%.

The Fed funds target stands at 3.50-3.75%, and the live policy question is whether the Fed hikes again this year, not whether it cuts. Wednesday's FOMC minutes from the June 16-17 meeting showed 9 of 18 submitted dots projecting at least one more 2026 hike, with Chair Warsh withholding his own dot — a hawkish detail that helped underpin the dollar. CNBC described the minutes as exposing a "family fight" over rates that could "drag on for a while." Treasury yields nudged higher: the 10-year added 4.8bp to 4.577%, the 5-year rose 6.3bp to 4.320%, the 30-year gained 2.7bp to 5.070%, and the 3-month bill was unchanged at 3.725%. New York Fed President John Williams is due to speak later today.

EUR/USD is little changed at 1.1419 (+0.06%), holding near 1.14 as hawkish Fed minutes offset rising ECB rate-hike bets tied to oil-driven inflation angst. GBP/USD rose to 1.3395 (+0.27%) after markets moved to fully price a 25bp Bank of England hike by year-end on the same oil shock. USD/JPY firmed to 162.53 (+0.26%), with the yen still pinned near multi-decade weak levels as the hawkish Fed minutes keep dollar demand intact. USD/CAD eased to 1.4176 (-0.17%), the loonie firming modestly on the oil jump even as USMCA non-renewal uncertainty caps further Canadian-dollar gains.

USD/JPY trades at 162.53, up 0.26% on the day; in the last completed session the pair rose to roughly 162.43 from 162.105 (+0.20%, Trading Economics), keeping the yen near its weakest level in roughly four decades — a fresh 40-year low was reportedly hit around June 30 (unverified). The driver was Wednesday's hawkish FOMC minutes: 9 of 18 submitted dots pointed to at least one more 2026 hike, with Chair Warsh withholding his own dot. No fresh intervention was reported this session despite the yen's proximity to those multi-decade lows. Finance Minister Satsuki Katayama has said Tokyo will act "at any time as needed" to counter excessive moves. The BoJ's policy rate is 1.00% against the Fed's 3.50-3.75% target, a wide gap underpinning dollar carry demand. Today's Japan calendar carries only low-importance releases: PPI y/y (previous 6.3%) and preliminary machine tool orders.

On the calendar: German Trade Balance (forecast 14.9B, previous 14.5B), a Eurogroup meeting in Brussels, and the ECB's Monetary Policy Meeting Accounts. US Unemployment Claims are forecast at 218K versus 215K previous, followed by FOMC Member Williams speaking. Later: US Existing Home Sales (forecast 4.19M, previous 4.17M), US Natural Gas Storage (forecast 60B, previous 87B), a 30-year Bond Auction (previous 5.02|2.3), and CHF's Gov Board Member Martin speaks. New Zealand markets are shut for a bank holiday. Japan releases PPI y/y (forecast 6.8%, previous 6.3%) and preliminary Machine Tool Orders y/y (previous 37.4%).