The dollar index advanced for a fourth straight session on Thursday, reaching 101.2—its longest winning streak since May—and holding near its July highs. The greenback remained underpinned by expectations of further Federal Reserve tightening. At the same time, oil prices climbed amid heightened tensions between the US and Iran, with talks on the sidelines of the UN General Assembly making little headway toward resolving the conflict. Rising energy costs, particularly as US diesel prices hit a fresh record, are expected to intensify inflationary pressures.
In this environment, traders have increased their wagers on additional Fed rate hikes this year, with markets now assigning nearly a 64% probability to another 25 bps increase in October. Recent remarks from several Fed officials have also been interpreted as hawkish. Meanwhile, the dollar gained against the Swiss franc after the Swiss National Bank kept its policy rate unchanged at 0%, and the Japanese yen slipped to a three-week low.
