Oil rallies, sending dollar higher on expectations of higher US rates
SPY•Oil prices rose as attacks on Saudi Arabia overshadowed hopes for supply improvements, while expectations of higher US interest rates lifted the dollar. US crude gained 1.9% to $93.55 a barrel and Brent rose 1.7% to $106.52.
1. Oil and dollar rise
Oil prices climbed on Monday as attacks on Saudi Arabia overshadowed hopes for supply improvements. The dollar rose as investors expected elevated energy and goods prices to prompt Federal Reserve rate increases, while global stocks were narrowly mixed.
2. Markets await data
Investors were watching for September inflation data and the third-quarter earnings season, which starts Tuesday with results from JPMorgan and Goldman Sachs; Bank of America is due to report Wednesday. The dollar index rose 0.4% to 102.59, while the euro fell 0.23% to $1.1175.
3. Rate expectations
Markets implied a 19% chance of a Federal Reserve rate increase this month and about a 71% chance of a 25-basis-point hike in December. Consumer prices were expected to rise 0.6% in September, taking annual inflation to 3.7%, while core inflation was forecast at 0.2% monthly and 2.5% annually.
