Forex
Dollar Surges as Oil Prices Climb, Fed Rate Hike Odds Soar
The US dollar strengthened on Tuesday as oil prices surged to a four-month high. Benchmark U.S. 10-year Treasury yields rose 7.2 basis points to 5.03%, their highest level since 2007.
Oil prices stood at $107.7 a barrel after Yemen's Iran-aligned Houthis launched new attacks on Saudi Arabia and Gulf-Iran talks were postponed. The renewed energy-induced inflation pressures follow a strong US jobs report and higher consumer prices for August.
Markets now see a Federal Reserve interest rate hike as almost certain, with CME's FedWatch tool pricing in over 94% chance of an increase on Wednesday. Francesco Pesole, FX strategist at ING, said 'it's quite likely they will hike at this point' and that the bond market is sending a warning signal.