Dollar index rises to 101.4, reaches three-month high on Fed tightening bets

  • The dollar index rose to 101.4 as expectations of further Fed tightening supported the greenback.
  • The index gained 0.2% in the previous session and is up 1.8% in September.
  • U.S.-Iran talks made little progress while markets awaited Wednesday’s PCE report and Friday’s jobs report.

The dollar index climbed to 101.4 on Tuesday, extending a 0.2% gain from the previous session and reaching a three-month high as expectations of further Federal Reserve tightening supported the greenback. Limited progress in U.S.-Iran talks to end the conflict and fully reopen the Strait of Hormuz kept energy-market concerns in focus, despite a decline in oil prices. Elevated energy costs could add to inflation pressures and encourage additional interest-rate increases. Strong U.S. economic activity has also supported the dollar, although job openings and consumer confidence released Tuesday came in weaker than expected. The PCE inflation report (a key U.S. consumer-price gauge) due Wednesday and Friday's jobs report are expected to offer further insight into the economy. Swaps traders are pricing nearly a full percentage point of Federal Reserve rate increases over the coming year. The greenback is up 1.8% in September but is little changed in the third quarter.

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