United States Dollar Index strengthens above 99.50 as Fed rate hike bets rise
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.60 in the Asian trading hours on Tuesday. The DXY edges higher on expectations of a US Federal Reserve (Fed) interest rate hike on Wednesday.
The US Dollar Index (DXY) has risen above 99.50 amid growing expectations of a Federal Reserve (Fed) interest rate hike during the September policy meeting. The DXY was trading near 99.60 during Asian trading hours on Tuesday. An increase in energy prices and higher-than-expected inflation in August have led markets to believe that the Fed will hike interest rates at this meeting.
The CME FedWatch tool showed an 92.4% chance of a rate increase, up from around 60% a week ago. UBS analyst Giovanni Staunovo stated that markets have fully priced in a Fed rate hike following last week's Consumer Price Index (CPI) data, while oil price rises could further fuel inflation concerns and keep the Fed in a hawkish stance.
Fed Chairman Kevin Warsh's press conference after the decision could provide insights into the US interest rate outlook. A non-committal or dovish rate hike could negatively impact the DXY, while hawkish remarks may boost the US Dollar in the short term. Tensions in the Middle East could also strengthen the US Dollar as a safe-haven currency.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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