Dollar softens as investors weigh Middle East jitters against inflation data

By Niket Nishant and Jiaxing Li

BENGALURU/HONG KONG, July 21 (Reuters) - The U.S. dollar ticked little connected Tuesday arsenic markets balanced conflicting signals from the Middle East against lingering optimism from softer ostentation information past week.

The euro roseate 0.09% ‌against the dollar to $1.1424 portion the yen declined 0.09% against the dollar to 162.63 yen.

The moves item the risks ‌that markets are grappling with arsenic they effort to terms successful the latest developments successful the Middle East.

The U.S. subject has struck Iran for 10 consecutive nights, reigniting ​tensions and prompting investors to dial backmost hopes that the struggle would extremity soon. That benignant of escalation typically drives flows into havens specified arsenic the dollar.

At the aforesaid time, efforts to find a diplomatic solution stay active. A elder Iranian authoritative told Reuters connected Monday that Tehran had received a connection from mediators for a 10-day ceasefire.

The deficiency of clarity connected wherever the struggle is headed has near the dollar ‌in limbo, with investors lacking condemnation to spot ⁠significant bets.

A murky ostentation outlook has added different furniture of uncertainty. Benign U.S. ostentation information released past week had already taken immoderate upwind retired of the currency by curbing bets connected further complaint hikes.

However, questions ⁠over wherever prices spell from present persist, arsenic the outlook for planetary ostentation hinges connected however soon shipping done the Strait of Hormuz returns to mean and lipid markets stabilize.

Traders expect astatine slightest 1 complaint hike by the Federal Reserve this year, according to information compiled by LSEG.

Brent crude ​futures ​dipped 1.1% connected Tuesday but person jumped astir 21% this month.

"A sustained depreciation ​of the U.S. dollar looks much similar a 2027 ‌story. We expect the dollar to stay steadfast implicit the adjacent fewer months until the ostentation representation becomes clearer," said Jimmy Jean, main economist and strategist astatine Desjardins.

The U.S. dollar index, which measures the currency against a handbasket of six peers, dipped 0.05% to 100.9 aft hitting its highest since July 15 successful the erstwhile session.

The Canadian dollar steadied aft dropping to a one-month low, aft the U.S. imposed a caller tariff of 50% connected a wide scope of Canadian products successful effect to what it called Ottawa's "discriminatory treatment" of ‌American-made cars, intoxicant and dairy goods.

POUND READIES FOR BURNHAM-HEALEY ERA

The British lb roseate ​0.1% against the dollar to $1.3441, connected people to drawback a three-day losing streak.

Andy ​Burnham became Britain's seventh premier curate successful a decennary connected ​Monday, and reiterated his committedness to instrumentality to the erstwhile government's fiscal rules. John Healey, the erstwhile defence ‌secretary, was appointed the caller concern minister.