Dollar Holds Firm; Fed Signals Key

The US Dollar Index held steady around 100.2 during Friday's trading (Sept 18), hovering near a seven-week high. The dollar is on track for a weekly gain of over 1% as investors assess the Federal Reserve's policy outlook following the latest interest rate hike, while falling oil prices have begun to ease inflation concerns.

The Fed unanimously raised interest rates by 25 basis points to a range of 3.75%–4.00%, marking the first increase in three years. Central bank officials also signaled the possibility of further tightening this year to curb price pressures. Fed Chair Kevin Warsh emphasized that inflation remains high, reinforcing expectations that a tight monetary policy stance will persist.

Market attention is also focused on the Bank of Japan, which is expected to raise interest rates. Meanwhile, the Bank of England kept rates unchanged on Thursday but warned that a prolonged Middle East conflict could necessitate a rate hike. In energy markets, oil prices fell for a third consecutive session as Saudi Arabia worked to restore flows through the East-West pipeline, helping to alleviate pressure on the inflation outlook.