US Dollar May Extend Rally on CPI, Churning Market Sentiment

US Dollar Currency Index


  • Hawkish shift in Fed rate hike outlook put US Dollar back on the offensive
  • Upside surprise on September’s US CPI statistics may bring further gains
  • Brazil election, IMF forecast update, Brexit news-flow may stoke volatility

See our US Dollar forecast to learn what will drive prices through the end of the year!

The US Dollar rose for a second consecutive week, buoyed by swelling Fed rate hike expectations. Italy stepped back from a budget row with Eurozone authorities in Brussels, downgrading fears that a fresh fissure within the currency bloc will spill out as broader market instability. That was interpreted as giving the US central bank more room for stimulus withdrawal. Fed Chair Jerome Powell poured fuel on the fire, saying rates may need to rise beyond the “neutral” level.

This led to a sharp steepening of the 2019 tightening path implied in Fed Funds futures, putting it at the most hawkish setting in two years by week-end. Two hikes look to be fully priced in at this

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