The dollar index rose 0.51% to 101.06 after touching 101.23, its highest since July 29, as strong US activity and Fed warnings of further hikes lifted the chance of at least a 25-basis-point October increase to about 70%, from roughly 53% before the data.
Last week’s 25-basis-point Fed increase took the rate range to 3.75%-4.00%. S&P Global’s flash index of manufacturing and services activity rose to 58.4 in September from 56.0 in August, its highest since July 2021; a surge in new orders strained supply chains and pushed prices higher.
Oil prices also climbed after Iran’s Supreme National Security Council secretary Mohsen Rezaei said the Strait of Hormuz would not reopen and negotiations would not take place unless Iran’s conditions were met. A senior Iranian official said Tehran and Washington remained far apart on ending the war but diplomacy should continue. Chicago Fed President Austan Goolsbee said policymakers may need to treat the energy shock as a source of persistent inflation rather than assume it will fade on its own.
