Forex Today: US Dollar firms as Oil surges on Hormuz

Here is what you need to know for Tuesday, August 11:

The US Dollar (USD) traded broadly firmer on Monday, with the US Dollar Index (DXY) up around 0.2% and holding just above 99.80 as Oil surged more than 6% on the ongoing Strait of Hormuz standoff. Unlike the sessions seen earlier this month, Gold and Silver climbed alongside the Greenback as safe-haven demand and energy-driven inflation risk pulled in the same direction.

The move came with United States (US) President Donald Trump pushing back on Iran's compensation demands over the weekend, saying Tehran should be held responsible for the damage across the region, while Iran denied it was in talks and set its own terms for reopening the Strait. With a deal still out of reach and the US naval blockade redirecting more vessels, the risk premium stayed in Crude and under the US Dollar.

West Texas Intermediate (WTI) Oil jumped more than 6% to trade near $81.70 per barrel as the reopening of the Strait of Hormuz remains uncertain. Gold added around 0.9% to trade near $4,380 as Hormuz delays and looming US inflation data kept traders cautious, while Silver outperformed, rising about 3.50% to near $65.70.

USD/JPY was the biggest mover among the majors, rising more than 0.9% to near the 159.30 region and extending its recovery as higher energy costs and firmer US yields weighed on the Yen.

EUR/USD slipped slightly to trade below 1.1550, unable to hold higher ground as the Middle East tensions lent the Greenback support.

GBP/USD firmed around 1.3500, the lone major to gain on the Dollar, holding the upper end of its recent range.

AUD/USD eased to near 0.7055, getting no lift from the Crude rally as traders squared up ahead of the Reserve Bank of Australia (RBA) decision. Early on Tuesday, the RBA will take center stage. The central bank is widely expected to keep the cash rate at 4.35%, so the focus falls on the accompanying Monetary Policy Statement, the Rate Statement, and Governor Michele Bullock's press conference for any signal on whether the tightening door is still open. The Aussie is set for volatility around the release even with the hold fully priced.

Later in the US session, the ADP Employment Change four-week average is seen near 15K, followed by Existing Home Sales Change for July, forecast at -2.4% MoM. Neither is a first-tier release, but both feed the labor and housing read into midweek.

The main event, however, sits one day further out with US Consumer Price Index (CPI) data due Wednesday. With Oil pushing inflation risk higher and the Federal Reserve (Fed) leaning hawkish, a hot print would hand the DXY another leg, while a soft one would offer retreat.