Dollar Wavers, Market Awaits Fed Decision
The US Dollar Index weakened to around 101.3 on Tuesday (July 28th) after testing 101.6 in the previous session. This position is near a 15-month high.
The dollar's weakening was triggered by falling energy prices, which eased concerns about a surge in inflation. This condition also limited expectations that the Federal Reserve would raise interest rates in the near future.
Fuel prices fell after United States officials stated that a diplomatic settlement with Iran was still possible. Hopes of a easing of the conflict have eased pressure on oil prices from their highs.
However, energy prices remain relatively high because exports from the Middle East remain low. The risk of supply disruptions has not completely dissipated inflation concerns.
Several Fed officials previously assessed that high inflation and a strong labor market could open the door to an interest rate hike. The Fed is expected to keep rates unchanged at its meeting on Wednesday, but the market still expects a hike before the end of the year.
The dollar maintained some of its gains against the euro and yen. Meanwhile, the pound continued to strengthen amid political developments in the UK, so the dollar's future direction will depend on the Fed's decisions and statements. (arl)
Source: Newsmaker.id
