Dollar firms as US-Iran tensions lift oil, hawkish Fed bets build
TLT•The dollar held near a two-month high as US-Iran tensions pushed oil higher and traders priced in a 65% chance of a Fed rate hike at its next meeting. Brent crude rose more than 1% to above $106 a barrel.
1. Dollar and oil rise
The dollar index edged up to 101.15 on Monday, putting it on track for a 1.7% gain in September, its best month since June. The euro and sterling each fell 0.1% against the dollar, while Brent crude rose more than 1% to above $106 a barrel as US-Iran tensions raised supply concerns.
2. Fed bets and data
Energy supply risks and US fundamentals heightened inflation concerns, prompting traders to price in a more hawkish Federal Reserve. Markets assigned a 65% chance of a rate hike at the Fed’s next meeting at the end of October. Investors are watching US PCE data on Wednesday and non-farm payrolls on Friday; both are expected to be consistent with further policy tightening.
