Dollar Volatility Continues Amid Fed Hike Expectations
The dollar's value remained uncertain on Monday, despite an increase in expectations for a Federal Reserve rate hike. The US currency faced headwinds from rising inflationary pressures due to Middle East tensions and concerns over growing US debt and policy uncertainties.
Traders now see a roughly 57% chance of a Fed rate hike this month, with much depending on Friday's inflation data. A hot CPI print would likely seal a September hike and strengthen the dollar, but a cooler reading could weaken it further.
The euro and sterling were marginally up against the dollar, while the Japanese yen rose more than 0.2% to 155.88 per dollar following expectations of a Bank of Japan rate hike this month.
Eric Robertsen from Standard Chartered noted that the recent strength in the yen could signal a change in asset allocation if it persists.