Dollar holds near seven-week high as traders price further Fed tightening

  • US 10-year Treasury yields rose about 3 basis points to 4.98% on Tuesday.
  • Federal Reserve officials Goolsbee and Musalem reinforced the case for further rate increases.
  • Oil prices fell for a fourth consecutive session as Middle East energy flows remained steady.

The DXY dollar index held around 100.4, just below a seven-week high, as a rise in the US 10-year Treasury yield to 4.98% reinforced the appeal of dollar assets. The yield increased about 3 basis points on Tuesday after Chicago Fed President Austan Goolsbee warned against overlooking persistent supply shocks and St. Louis Fed President Alberto Musalem said further rate increases might be needed to return inflation to target. Traders had priced a roughly 56% probability of another Federal Reserve rate increase in October, up from 43.5% a week earlier, following last week's rate increase and guidance pointing to more tightening. Investors awaited remarks from John Williams and Tom Barkin, while oil fell for a fourth consecutive session amid diplomatic efforts to end the Middle East conflict and steady regional energy flows.

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