The euro is headed for a monthly loss against the dollar in September, ending two straight months of gains, even though the greenback itself traded flat on Wednesday after a softer-than-expected US inflation print cut bets on an October Fed rate hike. Treasury yields eased and oil extended its monthly climb.
Euro set for September dip against the dollar
The dollar has been strengthening through September alongside rising US Treasury yields, on growing expectations of more Federal Reserve rate hikes amid inflation driven by higher oil prices. As a result, the greenback is still on track for monthly gains against the euro, the Swiss franc and the pound sterling. The euro itself was flat at $1.133050, still headed for a monthly loss against the dollar after two consecutive months of gains.
Softer inflation data curbs rate-hike bets
But the dollar pared some of its gains after Wednesday's data, before recovering as Treasury yields fell initially across the board. US Commerce Department figures showed the Personal Consumption Expenditures Price Index rose 0.3% last month, short of the 0.4% increase economists polled by Reuters had forecast. Traders are now pricing a 37% probability of a Fed rate hike in October, down from 70% a week ago, according to the CME's FedWatch tool.
According to Joel Kruger, markets strategist at LMAX Group: "giving the latest wave of dollar selling a clear fundamental catalyst." The two-year Treasury yield was last down 0.4 basis points at 4.885%, a gauge that typically moves with Fed rate expectations.
Oil climbs as yen and franc hold steady
Oil prices rose and were on track for a big monthly gain in September as US-Iran talks aimed at ending the war stalled. The Brent November futures contract rose 0.92% to settle at $103.53 a barrel. The dollar was also flat at 157.34 against the yen. It was up 0.26% at 0.83575 versus the Swiss franc, on track for a second straight month of gains.
Sterling strengthened 0.26% to $1.3265 but was set for a monthly loss against the dollar, ending two consecutive months of gains. The dollar index was flat at 101.47, still headed for a monthly gain in September that would snap two straight months of losses. Elsewhere, the Australian dollar weakened 0.57% to $0.6948. The kiwi weakened 0.09% to $0.5635.
Source: Investing.com
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