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US Dollar
Source: Newsmaker.id
The US dollar strengthened during Tuesday's trading (Sept 15) ahead of the Federal Reserve's interest rate decision. The Dollar Index rose to around 99.60 after the 10-year US Treasury yield touched 5.04%, its highest level since 2007.
The rise in yields was driven by a nearly 4% surge in oil prices, which reignited inflation concerns. High energy costs have increased market conviction that the Fed will raise interest rates at Wednesday's meeting.
Markets estimate a roughly 92% probability of a 25-basis-point rate hike. Since this decision is largely priced in, investor attention will focus on the latest economic projections, the "dot plot," and comments from Fed Chair Kevin Warsh regarding the possibility of further tightening.
In the foreign exchange market, EUR/USD weakened to around 1.1540, while GBP/USD remained under pressure near 1.3480. USD/JPY hovered around 155.00, supported by high US yields, though gains were capped by expectations of a Bank of Japan rate hike on Friday. AUD/USD also weakened to the 0.7130 area.
In commodity markets, gold traded above US$4,300 per troy ounce as inflation concerns and geopolitical risks in the Middle East continued to support demand. Meanwhile, WTI extended its rally above US$105 per barrel due to growing concerns regarding oil supplies from the Middle East.
Newsmaker Analysis: The dollar retains strong support from rising yields and expectations of a Fed rate hike. However, since a 25-basis-point increase is largely priced in, the currency's next move will be heavily influenced by Warsh's comments. If the Fed signals further hikes, the DXY could retest the 100.00 level. Conversely, a more dovish tone could trigger a correction in the dollar.
Source: Newsmaker.id