Dollar Set for Strong Monthly Advance
The dollar index traded around 101.4 on Wednesday and was on track to gain roughly 2% for the month, supported by concerns over persistent energy-driven inflation, a resilient US economy and hawkish signals from Federal Reserve officials that strengthened expectations for further rate hikes. Oil prices remain elevated as US-Iran negotiations remain deadlocked, although signs of improving energy flows from the Middle East have eased supply concerns. Meanwhile, Fed Governor Michael Barr reiterated his view that additional rate increases will likely be necessary to curb inflation, while New York Fed President John Williams said another rate hike “late this year” could be appropriate. Markets are currently pricing in nearly one percentage point of Fed rate increases over the next 12 months. Investors now await Wednesday’s PCE price index report, the Fed’s preferred inflation gauge, followed by Friday’s closely watched monthly jobs report for further guidance.
4 on Wednesday and was on track to gain roughly 2% for the month, supported by concerns over persistent energy-driven inflation, a resilient US economy and hawkish signals from Federal Reserve officials that strengthened expectations for further rate hikes. Oil prices remain elevated as US-Iran negotiations remain deadlocked, although signs of improving energy flows from the Middle East have eased supply concerns. Meanwhile, Fed Governor Michael Barr reiterated his view that additional rate increases will likely be necessary to curb inflation, while New York Fed President John Williams said another rate hike “late this year” could be appropriate.
Markets are currently pricing in nearly one percentage point of Fed rate increases over the next 12 months. Investors now await Wednesday’s PCE price index report, the Fed’s preferred inflation gauge, followed by Friday’s closely watched monthly jobs report for further guidance.