Dollar ascends to fresh 2-month high on inflation worry, Fed hike expectations
TLT•The dollar index rose 0.15% to 101.28, its highest since July 29, as Treasury yields climbed and traders increased expectations of further Federal Reserve rate hikes. Weekly initial jobless claims fell to 197,000, below the 201,000 estimate.
1. Dollar reaches two-month high
The dollar hit a fresh two-month high on Thursday as Treasury yields rose and expectations of further Federal Reserve rate hikes strengthened after hawkish comments from officials and solid economic data. The dollar index gained 0.15% to 101.28 and touched 101.39, its highest since July 29.
2. Rate outlook and data
Weekly initial jobless claims dipped by 1,000 to 197,000, below economists’ 201,000 estimate. Expectations of at least a 25-basis-point rate hike at the Fed’s October meeting rose to 68.6% from 55.4% a week earlier. The Fed raised rates by 25 basis points last week, to a range of 3.75%-4.00%, and officials said further increases may be needed if inflation does not moderate.
3. Yields and currencies
The 30-year Treasury yield reached its highest level since June 2004, while the 10-year yield reached its highest in nearly two decades. Oil prices rose almost 4% during choppy trading as a Houthi missile attack on Saudi Arabia revived supply-disruption fears. The euro fell 0.07% to $1.1372, and the yen weakened 0.32% to 158.82 per dollar.
