Rising oil prices are dampening expectations of an interest rate cut at Federal Reserve, while the dollar is strengthening
Svmuu News: The U.S. dollar strengthened against all major currencies as rising oil prices prompted swap traders to reduce their bets on interest rate cuts by the Federal Reserve this year. The inflationary impact of higher oil prices has led swap traders to currently expect interest rate cuts of approximately 59 basis points this year Federal Reserve, down from 61 basis points projected last Friday.Gareth Berry, a strategist at Macquarie Group in Sydney, said this could be an early signal that the market believes the Federal Reserve’s willingness to cut rates will diminish if oil prices continue to surge and ultimately translate into higher inflationary pressures in the U.S.Deteriorating risk sentiment also fueled the dollar’s rise. S&P 500 futures fell 1.5% after Iran’s national security chief stated the country would not negotiate with the U.S.U.S. President Donald Trump said airstrikes against Iran would continue until objectives were met and called on Iranian leaders to surrender. On Monday, the dollar was one of the few traditional safe-haven assets to rise, aside from gold, while U.S. Treasuries, the yen, and the Swiss franc all retreated. (Jin Shi)
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