Dollar Index drops on Iran deal report, steadies on denial
Reports that Washington and Tehran have both given preliminary approval to a Qatar and Pakistan compromise have pushed the Dollar Index to its lowest since October 1. It fell from near 101.75 to about 101.65 on the first report and to just above 101.50 once Israel's Channel 12 added the terms. It's back near 101.70 after a diplomat in the talks said reports that a deal is close are wrong.
Crude Oil fell on the reports, and the Euro, more than half the index by weight, rose as energy got cheaper. Treasury Secretary Bessent blamed higher US rates on the energy shock, so a deal that ends it could mean lower US rates and a weaker Dollar.
Housing starts fell to 1.221 million in September against a 1.3 million forecast, and pending home sales dropped 7.3% to a record low against a forecast fall of 0.5%. Weak housing is an argument against more Fed hikes, and the index rose on both release bars.
On the calendar
Fed officials are in their quiet period ahead of the October 27-28 Federal Open Market Committee (FOMC) meeting, so there's no Fed commentary before the decision on October 28. In a poll of 100 economists, 94 expect a hold at 3.75%-4.00% in October and all 100 expect a December hike.
Initial jobless claims follow at 12:30 GMT on Thursday, and S&P Global's flash Purchasing Managers Index (PMI) readings for October at 13:45 GMT on Friday. Both feed the case for a hike on October 28 instead of December, which 6 of the 100 economists expect.
On the charts
At the low, the index had given back about a third of its climb from the September 9 low near 98.60 to the October 14 high just under 103.00. The session low is also under Friday's dip near 101.60, and the 50-day Exponential Moving Average (EMA) is just under 101.00, about three-quarters of a point below.
