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⑴ UniCredit Research strategists stated that after the temporary peace agreement between the US and Iran was reached, the market lowered but did not completely eliminate expectations of a Federal Reserve rate hike, which has limited the decline of the US dollar. ⑵ According to institutional data, the market sees a 68% probability of a 25 basis point rate hike in December and fully reflects expectations of action by March next year. ⑶ Strategists pointed out in a report that a rate hike is still possible, which would make the decline of the US dollar appear less drastic compared to the movements of other assets such as oil prices. ⑷ The agreement is only temporary and lays the foundation for a new round of 60-day negotiations on the fate of Iran’s nuclear program. On Monday, the DXY US Dollar Index fell 0.2% to 99.517.

(1) The London Metal Exchange benchmark copper contract CMCU3 rose 0.5% on Monday to $13,767 per ton, as the US and Iran reached a framework agreement to end the conflict and reopen the Strait of Hormuz, easing concerns over energy-driven inflation and pressing down the US dollar. (2) Shares of global mining giants listed in the US rose accordingly, with Rio Tinto up 1% and BHP up 1.2%. (3) Copper miners Southern Copper and Freeport-McMoRan each gained 3.8%, showing a stronger performance. (4) Canadian miners led the gains, with Hudbay Minerals soaring 4.8%, Ero Copper rising 3.2%, and Teck Resources up 4%.

⑴ Capital Economics stated on Monday that although the temporary peace agreement between the US and Iran is fragile, it will reduce the risk of more serious macroeconomic and market scenarios in the coming months. Chief Economist Neil Shearing noted that it will take time for oil supplies to return to normal. ⑵ Oil tankers are not yet in position, and production and refining facilities have not resumed full operations, so the flow of oil through the Strait of Hormuz cannot immediately return to pre-war levels. ⑶ The agreement will not prevent a short-term rise in inflation, nor will it keep global economic growth in the third quarter from being hit. The global economy may experience a period of growth below trend in the third quarter, rather than fall into recession. ⑷ Capital Economics added that by the end of 2026 or 2027, GDP growth outside the Gulf states should return to the pre-war level of 3%.