Dollar Gains as Crude Oil Prices Soar and Yields Surge
The dollar index DXY rose by +0.26% on Thursday amid a surge in crude oil prices and T-note yields. The WTI crude oil price jumped to a 3.5-month high, boosting inflation expectations and potentially persuading the Fed to raise interest rates.
The jump in T-note yields also strengthened the dollar's interest rate differentials. Additionally, falling stocks on Thursday boosted liquidity demand for the dollar, further contributing to its gains.
Thursday's US economic news also supported the dollar, with stable weekly jobless claims and stronger-than-expected Aug PPI data. The markets are discounting a 71% probability of a +25 bp rate hike at the next FOMC meeting on September 15-16.