Dollar Surges as Rate Hike Bets and Oil Prices Boost Inflation Concerns
The US dollar has started the week on a strong note, buoyed by a combination of domestic and external factors. The recent hotter-than-expected CPI print has all but sealed a Federal Reserve rate hike on Wednesday, with consensus nearly unanimous that the Fed will raise rates by 22 basis points. While this may limit the dollar's upside on the day, it still has room to catch up with higher front-end rates.
The external environment is also playing in favor of the dollar, with oil prices rising again today and stoking inflation concerns that are boosting expectations for a rate hike. The PBOC set the dollar's reference rate at a new 3 1/2-year low today, while among G10 currencies, the Swedish krona has been the hardest hit, falling around 0.8%.
The surge in oil prices and inflation concerns have also led to gold prices easing on Monday, with spot gold slipping 0.3% to $4,334.31 per ounce. US gold futures dropped 0.8% to $4,375.00.