Dollar rises to eight-week high as Fed rate hike expectations heat up

PANews, September 23 — As the market bets that the Federal Reserve will raise interest rates further, the dollar has climbed against a basket of currencies to its highest level since late July. The Fed raised rates by 25 basis points last week and signaled at least one more hike this year, and as market expectations for further hikes continue to build, the dollar has gained support. During European afternoon trading, renewed gains in energy prices also boosted the dollar, with Brent crude climbing back above $100 per barrel.

Because of the dollar's safe-haven attributes and the United States' status as a net oil exporter, rising energy prices typically favor the dollar. However, as rate expectations have become the dominant factor, the dollar's sensitivity to oil price swings has diminished. "The medium- to long-term dollar strengthening trend we had previously forecast may finally be starting to emerge," Standard Chartered strategist Steve Englander said in a report.