Home›Forex›Major Pairs›Dollar index seen firm as oil prices and rates reactio…

Dollar index seen firm as oil prices and rates reaction strengthen

Brent traded near $80 per barrel during the session as short-end interest rates moved more than FX, keeping the DXY biased toward 101.5.

Reported · Written up by our desk · Major Pairs

INGs Chris Turner said the US dollar is expected to stay supported against low-yielding currencies, pointing to a stronger reaction in interest rates driven by higher oil prices and Gulf tensions.

In Turners view, Brent trading near $80 per barrel and heightened Middle East tensions also coincided with “large moves at the short end of interest rate curves,” while carry trades in emerging markets were unwound.

Turner cited the release of the FOMC minutes for the June meeting, saying the Fed discussion presented two equally credible scenarios: a delayed rate cut if inflation dissipates or a more immediate hike if inflation remains high.

He noted the minutes themselves did not move the dollar or US rates much, but argued that higher energy prices could provide fuel for Fed hawks, leaving the US Dollar Index, or DXY, around 101.0 with a bias back toward 101.5.

Latest closeBrent $85.92 ▼2.8%|Dollar index 101.39 ▼0.1%

More like this

Sources