Trending
US Dollar
Source: Newsmaker.id
The US dollar strengthened to a more-than-one-week high during Tuesday's trading (Sept 15), driven by growing expectations that the Federal Reserve will raise interest rates this week. The dollar index rose approximately 0.24% to the 99.60 level, alongside a rise in US Treasury yields and a surge in oil prices.
The euro weakened by about 0.1% to US$1.1539, remaining near a one-month low. Pressure on the single currency persists despite the European Central Bank raising interest rates by 25 basis points to 2.50% last week, as markets remain concerned about the risk of stagflation in the Eurozone.
The Japanese yen also weakened by around 0.3% to 154.82 per US dollar, moving away from the seven-month high of 152.89 reached last week. Investors are now awaiting the Bank of Japan's decision on Friday, with the market anticipating a 25-basis-point rate hike to 1.25%.
Markets estimate the probability of the Fed raising rates by 25 basis points on Wednesday at approximately 92.1%, significantly higher than the ~60% seen the previous week. Such a hike would bring the interest rate range to 3.75%–4.00%. Markets are also beginning to price in a 53.4% chance of a further hike at the October meeting.
Dollar strength was further bolstered by the 10-year US Treasury yield breaching the 5% mark for the first time since 2007. Simultaneously, Brent crude rose above US$113 per barrel following fresh attacks on Saudi Arabia's energy infrastructure and increased Houthi activity in the Red Sea, reigniting inflation concerns.
Newsmaker Analysis: The dollar retains strong support ahead of the FOMC meeting, driven by a combination of high yields, elevated oil prices, and expectations of a Fed rate hike. However, the dollar's rally ahead of the central bank decision also risks a correction if the Fed signals a more dovish stance than anticipated. Market focus will next shift to Kevin Warsh's tone and the Bank of Japan's decision later in the week. (arl)
Source: Newsmaker.id