XAG/USD Plunges Amid Growing Fed Rate Hike Odds
The XAG/USD price has fallen to near $62.00 amid growing expectations of another Federal Reserve interest rate hike in October.
Traders are keeping a close eye on Middle Eastern geopolitical developments, particularly after US President Donald Trump's rejection of Iran's latest proposal to reopen the Strait of Hormuz.
The Fed's decision to raise its target funds rate range has strengthened the US dollar against the Canadian dollar. Money markets now price in a 65.9% probability of another benchmark interest rate hike at the October Fed meeting, up from 57.6% last week and just 9.4% a month ago.
Strategists at OCBC note that resilient US economic data, elevated energy prices, and persistent inflation concerns are driving Treasury yields higher. This backdrop is supporting dollar strength but posing challenges for markets reliant on low funding costs and stable volatility.