Dollar index steadies near 98.8 as oil-led inflation concerns rise
The dollar index steadied around 98.8 Wednesday, pausing its decline as oil prices extended gains. Traders look ahead to US inflation data this week and are pricing a 60% chance of a 25-basis-point Fed hike.
8 on Wednesday, pausing its recent decline as higher oil prices stoked inflation concerns and lifted expectations for a Federal Reserve rate increase. Oil prices extended gains after US forces destroyed five Iranian crude tankers near Kharg Island in response to attempted missile attacks on a US warship. Investors are also awaiting key US inflation data this week for more clues on the Federal Reserve’s policy outlook ahead of next week’s meeting. Markets are pricing in roughly a 60% chance of a 25-basis-point Fed rate hike after stronger-than-expected jobs data released Friday.
The European Central Bank and Bank of Japan are also expected to tighten monetary policy this month. The dollar remained under pressure against the yen after Treasury Secretary Scott Bessent warned traders against betting on further weakness in the Japanese currency.