Dollar index tops 99.7 as Fed hike odds near 70%
The dollar index rose above 99.7 to a nearly three-week high on surging oil prices and stronger inflation-rate hike expectations. Markets are pricing about a 70% chance of an imminent Fed move this month.
The dollar index rose above 99.7 on Wednesday, reaching its highest level in nearly three weeks as surging oil prices intensified inflation concerns and reinforced expectations for an imminent Federal Reserve interest rate hike.
Oil prices advanced for a third consecutive session amid escalating hostilities between the US and Iran, raising concerns over further disruptions to energy flows from the Middle East.
Meanwhile, Fed Chair Kevin Warsh’s commitment to combating inflation strengthened bets for a rate increase, with markets now pricing in around a 70% chance of a move this month.
Fed Governor Michael Barr also said on Tuesday that the central bank should be prepared to raise interest rates if inflation fails to ease.
Attention now turns to the ADP employment report due Wednesday and nonfarm payrolls on Friday for further clues on the Fed’s policy path.