DOLLAR FALLS AS U.S. INFLATION SLOWS, OIL PRICES STABILISE AFTER MIDDLE EAST TENSIONS

DOLLAR FALLS AS U.S. INFLATION SLOWS, OIL PRICES STABILISE AFTER MIDDLE EAST TENSIONS

The United States dollar weakened on Tuesday after fresh inflation data showed a slowdown in consumer price growth, easing expectations that the Federal Reserve would raise interest rates later this month.

The development came as global oil prices, which had surged following renewed tensions between the United States and Iran, later stabilised after U.S. President Donald Trump reversed plans to impose a 20 per cent levy on ships passing through the Strait of Hormuz.

Earlier in the day, crude oil prices jumped sharply after reports of fresh U.S.-Iran strikes and attacks on two vessels near the strategic shipping route, raising concerns over potential disruptions to global energy supplies. However, market gains moderated after Trump's policy reversal reduced fears of additional pressure on international shipping.

According to the latest U.S. inflation data, consumer prices rose by 3.5 per cent year-on-year in June, down from 4.2 per cent in May. The decline was largely attributed to lower energy prices and reduced expectations of an immediate interest rate increase by the Federal Reserve.

Core inflation, which excludes food and energy prices, also slowed to 2.6 per cent from 2.9 per cent recorded in May, strengthening market confidence that inflationary pressures in the world's largest economy may be easing.

Following the release of the inflation figures, traders significantly lowered expectations of a July interest rate hike, with market estimates dropping from about 40 per cent earlier in the day to around 13 per cent.

Meanwhile, the second-quarter earnings season began with JPMorgan Chase reporting a record quarterly net profit of $21.2 billion, described as the largest quarterly profit in U.S. banking history.

Despite the positive earnings report, Wall Street opened lower after IBM shares plunged 23 per cent when the technology company warned that its second-quarter earnings would fall short of expectations. IBM attributed the weaker outlook to customers shifting spending toward servers and storage amid concerns over supply constraints and possible price increases.

The broader technology sector, however, benefited from the spending shift, with the PHLX Semiconductor Index gaining more than three per cent during trading.

International benchmark Brent crude briefly climbed about five per cent to around $87 per barrel before trimming gains as geopolitical concerns eased.

European stock markets recovered after initial losses linked to rising oil prices, while most Asian markets closed higher as technology stocks rebounded from recent declines.