Dollar steadies near two-month high as US-Iran stalemate lifts oil and Fed rate hike bets build
TLT•The dollar index held at 101.14, near a two-month high, and was set for a 1.7% monthly gain as oil prices rose on US-Iran tensions. Markets priced a 65% chance of a quarter-point Fed rate hike in October.
1. Oil and yields support dollar
The dollar was steady near a two-month high as the US-Iran standoff lifted oil prices and Treasury yields. Brent crude was above $107 a barrel after rising more than 3% on Monday, following President Donald Trump’s rejection of a peace deal with Iran.
2. Markets weigh Fed outlook
Traders were looking to US PCE inflation data on Wednesday and nonfarm payrolls on Friday for clues about the Fed’s policy path. Markets saw a 65% chance of a quarter-point rate hike at the October 28 meeting, after the Fed raised rates in September.
3. Yen gains after warning
The yen rose to 156.75 per dollar after Japan’s top currency diplomat said markets should take at face value last week’s “very clear” message from Tokyo and Washington on the yen. Japanese service-sector inflation rose in August at its fastest annual pace in more than two years.
