Forex-Dollar ticks up as oil prices climb, Fed rate hike chances firm
TLT•Fed hike seen as near certainty
Markets now see a Fed hike on Wednesday as a near certainty, with CME's FedWatch tool pricing in a more than 92% chance of an interest-rate increase.
"It's quite likely they will hike at this point. What's happening in the bond market is a warning signal, and if they decide to hold rates at this stage, it can lead to unwanted turmoil," said Francesco Pesole, FX strategist at ING.
"From an FX perspective, we see it as a positive event for the dollar."
The renewed energy-induced inflation pressures follow a U.S. jobs report that was much stronger than expected and a pickup in consumer prices for August, strengthening market conviction that the Fed will raise rates on Wednesday.
Economists polled by Reuters also expect at least one more hike by the end of March, reversing a fragile no-change consensus prior to Friday's official data showing firm inflation.
