The yield on 10-year U.S. Treasury bonds rose to 5.041% — its highest level since 2007, while markets put the probability of a Federal Reserve rate hike as early as Wednesday at 95%. Against this backdrop, the dollar strengthened against most major currencies, Reuters reports, writes UNN.
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One factor behind the renewed inflationary pressure was the rise in oil prices. The price is holding above $105 per barrel, near a four-month high, after a new wave of Houthi attacks on Saudi Arabia and the postponement of talks between the Gulf countries and Iran.
The dollar index, which tracks the currency against six major currencies, rose 0.15% to 99.631. The euro fell 0.1% to $1.1541, while the British pound lost 0.2% and traded at around $1.3477.
Markets are almost certain of a Fed rate hike
Expectations of tighter monetary policy have risen not only because of higher energy prices. Stronger-than-expected U.S. labor market data and an acceleration in consumer inflation in August also strengthened the case for a rate hike.
The dollar rose sharply after the Fed chair hinted at a possible rate hike29.08.26, 05:56
Investors are now focused on signals from the Fed regarding its next steps. Economists polled by Reuters expect at least one more rate hike by the end of March 2027.
In the foreign exchange market, the dollar also gained 0.5% against the yen, which briefly fell below the level of 155 yen per $1. Meanwhile, bitcoin dropped 5% amid weaker demand for riskier assets, to $75,320.