The Dollar Index climbs on Fed hike bets and stalls at its usual ceiling
The Dollar Index trades near 99.50, up 0.4% on the day, and it made the whole of that gain while America was asleep. A 5% Treasury yield sounds like the best thing that could happen to the Dollar, and New York has spent the morning selling it.
The Dollar Index rose to 99.60 as investors placed bets on a potential Federal Reserve interest rate hike, but it has since stalled at its usual ceiling of around 99.75. The index's gain was driven by the European Central Bank's recent rate hike and expectations of further rate increases from the Bank of Japan and the Bank of England.
However, the widening interest rate gap between the US and its major global counterparts is not substantial enough to continue the Dollar's upward trajectory. The Euro is currently at its lowest level since mid-August, contributing to the Dollar's rise. The Federal Reserve is expected to raise interest rates by 0.25% at its meeting on Wednesday, with futures markets indicating a 90% probability of this hike.
The Dollar's resistance level is just below 99.75, with significant support found at 99.05 and 98.80. The next key economic indicators to watch include August retail sales, British inflation, and jobless claims, which will provide insight into the strength of the US economy and the Fed's future rate decisions.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
