Rising Oil Prices Dampen Fed Rate Cut Bets, Dollar Strengthens

Odaily News According to Jinshi, the U.S. dollar strengthened against all major currencies as rising oil prices prompted swap traders to reduce their bets on Federal Reserve rate cuts this year. The inflationary impact of higher oil prices has led swap traders to currently price in approximately 59 basis points of Fed rate cuts for this year, down from the 61 basis points expected last Friday. Gareth Berry, a strategist at Macquarie Group in Sydney, noted that this could be an early signal that the market believes the Fed's willingness to cut rates will diminish if the oil price surge persists and ultimately translates into higher U.S. inflation pressure. A deterioration in risk sentiment also contributed to the dollar's rise. S&P 500 index futures fell 1.5% after Iran's national security chief stated that the country would not negotiate with the U.S. U.S. President Trump indicated that the bombing campaign against Iran would continue until objectives were met and called on Iranian leaders to surrender. On Monday, aside from gold, the dollar was one of the few traditional safe-haven assets that rose, while U.S. Treasuries, the Japanese yen, and the Swiss franc all retreated. (Jinshi)