Dollar steadies near 99.5 as Fed hike odds climb
The dollar index held around 99.5 Tuesday after a prior-session dip as investors weighed hawkish comments from Fed Chair Kevin Warsh and higher oil prices. Markets priced a more than 65% chance of a September hike.
The dollar index steadied around 99.5 on Tuesday after declining in the previous session, as investors continued to assess prospects for Federal Reserve interest rate hikes following hawkish comments from Chair Kevin Warsh and rising oil prices.
Investors are also bracing for a busy economic calendar, with the latest US manufacturing and services activity data due later today, ahead of the highly anticipated August jobs report on Friday.
Warsh said on Friday that the Fed will “have work to do” if policymakers lack sufficient confidence that inflation is moving toward 2%, signaling the potential for an imminent rate increase to curb persistent price pressures.
Markets are now pricing in a more than 65% chance of a September hike, up from around 36% before his remarks.
Meanwhile, oil prices climbed for a second straight day after US forces struck an island in the Strait of Hormuz, while Iran responded with attacks on the UAE and Jordan.