The U.S. dollar, euro, and Australian dollar traded almost unchanged on Tuesday as currency markets waited for the next major inflation signal.
FX traders were balancing weaker U.S. jobs data against rising oil prices and ongoing tensions around the Strait of Hormuz. These factors could influence global central bank policy in the coming months.
Dollar Stays Flat After Weak Jobs Data
The Dollar Spot Index held steady near 99.84.
The dollar had recently come under pressure after U.S. Labor Department data showed an unexpected loss of 23,000 jobs in July. Previous employment figures were also revised lower.
The weak jobs report reduced expectations for a Federal Reserve rate hike in September. It also pushed global bond yields lower and pulled the dollar back from recent highs.
Energy Prices Limit Dollar Weakness
Despite the weaker jobs data, the dollar avoided a sharper decline.
Rising crude oil prices and geopolitical risks in the Persian Gulf helped support demand for the greenback.
Oil prices moved toward multi-week highs after diplomatic talks over transit routes in the Strait of Hormuz stalled.
Hopes for a quick agreement faded after U.S. President Donald Trump added strict conditions to an Iranian-Oman proposal. The conditions reportedly included financial compensation from Tehran for regional conflict damage.
Hormuz Tensions Keep Inflation Risks Alive
The political deadlock has increased concerns about energy-driven inflation.
Higher oil prices can raise costs for major importing economies, especially in Europe and Asia. This makes it harder for central banks to ease policy too quickly.
For FX traders, the issue is clear: even if labor markets are weakening, higher energy costs could keep inflation elevated.
Euro Trades in a Tight Range
The euro remained almost unchanged near $1.1540.
Traders are weighing the Eurozone’s domestic economic outlook against the risk of renewed energy shocks.
Markets are also waiting for key European data later this week. This includes Eurozone second-quarter GDP and final July inflation readings from Germany, France, and Spain.
These reports may help investors judge whether the European Central Bank can keep rates unchanged in September.
Australian Dollar Holds Firm After RBA Decision
The Australian dollar traded flat near $0.7055.
The currency held steady after the Reserve Bank of Australia kept its benchmark cash rate unchanged at 4.35%, as expected.
RBA Governor Michele Bullock maintained a cautious tone. She noted that underlying inflation was softer than expected in the second quarter, but price pressures remain a concern.
The RBA also repeated that it is ready to raise rates again if inflation risks increase.
CPI Report Becomes the Main Market Test
Currency markets are now focused on Wednesday’s U.S. Consumer Price Index report.
Core CPI is expected to rise 0.2% month-on-month. The result could shape expectations for Federal Reserve policy heading into autumn.
A softer inflation reading could support the case for an extended Fed pause. However, a hotter number could revive rate hike expectations and create fresh volatility across FX markets.
FX Markets Wait for Direction
The quiet trading session reflects uncertainty rather than confidence.
The dollar, euro, and Australian dollar are all holding steady as traders wait for clearer signals from inflation data, oil prices, and central bank policy.
For now, the next major move in currency markets may depend on whether U.S. inflation confirms the slowdown suggested by weaker jobs data.
