Dollar Maintains Hawkish Grip Amid Trump-Xi Meeting Uncertainty

The US dollar remains strong as investors maintain high expectations for future rate hikes by the Federal Reserve. Fed speakers, including Boston Fed President Susan Collins and Richmond Fed President Tom Barkin, reinforced this hawkish sentiment, citing elevated price pressures and upside inflation risks.

Collins stated that 'elevated price pressures demand more restrictive policy for achieving long-term price stability.' The market is pricing in a 50% chance of back-to-back rate hikes at the October gathering and expects an additional 80bps worth of rate increases by the end of 2027.

The dollar's strength extends across most of its peers, with oil prices slipping amid hopes for a US-Iran conflict breakthrough. The AI frenzy is also driving market momentum, as evidenced by the Nasdaq hitting fresh record highs.