Dollar Surges on Strong US Business Survey Outcome
The US dollar strengthened further on Wednesday, extending its winning streak to four days, after a strong business survey outcome in the US reinforced expectations of further Federal Reserve rate hikes.
The September US flash composite PMI jumped to 58.4 from 56.0, beating the consensus estimate of 53.7, and its highest level since July 2021. Services climbed to 58.7 from 56.5 against expectations of 55.8, while manufacturing rose to 57.0 from 53.9.
Strong US composite PMI data revived inflation concerns, reinforcing expectations of further Federal Reserve rate hikes, according to a reaction note from Julius Baer, the investment bank. The composite input prices index jumped to a 46-month high of 66.1 from 58.9, reflecting the renewed climb in energy prices.
The dollar's advance was also fueled by rate differentials, which have tilted further against all of its major rivals, contributing to losses in spot markets. Markets put the odds of an October hike at more than 50%, with three moves priced by next June.