The dollar index held above 102 on Monday after four consecutive weeks of gains, as investors cautiously awaited key inflation data due this week for fresh guidance on the Federal Reserve’s next policy steps. The September consumer price index and producer price index are scheduled for release on Wednesday and Thursday, respectively. A stronger-than-expected inflation print could reignite the recent bond selloff by increasing pressure on the Fed to adopt a more aggressive tightening stance.
Markets are currently pricing in roughly an 83% probability that the Fed will leave interest rates unchanged this month, while the implied likelihood of a rate hike in December is about 86%.
At the same time, oil prices fell on hopes that increased Russian diesel supplies could help ease global fuel shortages and mitigate inflationary pressures. President Trump said Moscow had agreed to release diesel fuel to global markets and claimed that Russia and Ukraine had reached an “energy ceasefire” set to take effect immediately.
