Home›Forex›Major Pairs›Rising oil prices and Fed outlook lift the US dollar

Rising oil prices and Fed outlook lift the US dollar

BBH said Fed minutes implied most participants saw another rate hike as likely by year end, with futures pricing a full 25 bps move to 4.00 to 4.25% by Dec. 9.

Reported · Written up by our desk · Major Pairs

Brown Brothers Harriman’s Elias Haddad said higher oil prices are weighing on stocks and bonds, while supporting a firmer US dollar.

In BBH’s view, the FOMC minutes showed most participants backing another rate increase by year end, and Fed funds futures have already fully priced a 25 bps hike to 4.00 to 4.25% by Dec. 9, BBH said.

BBH added that persistently high energy prices keep upside risks for inflation and policy rates, and that while energy exporters’ currencies may benefit, the combination of US growth outperformance and foreign demand for US securities adds support to the dollar.

BBH also noted there was no new information from the September 15 to 16 FOMC minutes, with the key takeaway being that most participants assessed another increase in the federal funds rate target range would likely be appropriate by year end.

More like this

Sources