Home›Forex›Major Pairs›Energy prices lift bets of a September Fed hike and th…

Energy prices lift bets of a September Fed hike and the dollar

MUFG says 17 bps of Fed hikes are already priced for the Sept. 16 meeting, while the 2-year Treasury yield has reached 4.41%.

Reported · Written up by our desk · Major Pairs

MUFG’s Lee Hardman said rising energy prices are strengthening expectations for additional Federal Reserve tightening, a setup that could support the US dollar into the Sept. 16 FOMC meeting, according to FXStreet.

The note cited market pricing of 17 bps of Fed hikes for the Sept. 16 meeting and pointed to the 2-year US Treasury yield climbing to a fresh year-to-date high at 4.41% as a key factor behind the dollar’s strength.

Hardman added that while a September hike is not a done deal, the outcome could depend on upcoming US data, with the view that soft August NFP and CPI prints may be needed to prevent a hike.

The commentary also referenced counterweights to dollar support, including policy risk premium dynamics and concerns tied to larger planned US Treasury buybacks that could raise debasement fears, FXStreet said.

More like this

Sources