Dollar strengthens as oil and Fed signals lift October hike bets

  • The dollar index held above 101 after four consecutive sessions of gains, reaching a nearly two-month high.
  • Markets priced roughly a 67% probability of an October Federal Reserve rate increase as oil prices and hawkish official signals reinforced tightening expectations.
  • Weekly initial jobless claims fell by 1,000 to a two-month low of 197,000, while the three major U.S. stock indexes closed mixed.

The dollar index held above 101 on Friday after four consecutive daily gains, reaching its strongest level in nearly two months and heading for a second straight weekly advance. International oil prices closed sharply higher amid signs of progress involving the Strait of Hormuz, while resilient U.S. data and hawkish Federal Reserve signals heightened inflation concerns and lifted market pricing for an October rate increase to roughly 67% after last week’s hike. New York Fed’s John Williams said more work was needed to control inflation, and Philadelphia Fed’s Anna Paulson said modest additional tightening could be warranted. Weekly initial jobless claims unexpectedly fell by 1,000 to 197,000, a two-month low. The three major U.S. stock indexes ended mixed, and investors awaited consumer sentiment and durable goods data for further economic signals.

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