Dollar Hits One-Week High as Fed Rate Hike Bets Spike to 92% and Oil Tops $113

TLDR

• The U.S. dollar climbed to its highest level in over a week on Tuesday
• Markets are pricing in a 92.1% chance of a Fed rate hike on Wednesday
• The Dollar Index rose around 0.24% to hover near 99.60
• Brent crude surged past $113 a barrel after attacks on Saudi pipeline infrastructure
• The euro fell to one-month lows near $1.1539, while the yen slipped to over one-week lows

The U.S. dollar pushed higher on Tuesday, hitting its strongest level in more than a week as traders sharply increased their bets on a Federal Reserve interest rate hike at this week’s policy meeting.

The Dollar Index, which measures the greenback against six major currencies, rose around 0.24% to trade near 99.60. On Monday, it had already touched a one-month high of 99.736.

Markets are now treating a Fed rate increase as almost certain. Data from CME FedWatch puts the probability of a 25-basis-point hike into the 3.75%-4.00% range at 92.1%, up from around 60% just last week. Money markets are also pricing in a 53.4% chance of another hike at the October meeting.

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