Rising oil prices suppress Fed rate cut bets, dollar strengthens

Odaily Planet Daily reported that due to rising oil prices prompting swap traders to reduce their bets on the Federal Reserve cutting interest rates this year, the US dollar has strengthened against all major currencies. The inflation impact from rising oil prices has led swap traders to currently expect about 59 basis points of rate cuts from the Fed this year, down from last Friday’s expectation of 61 basis points. Gareth Berry, a strategist at Macquarie Group in Sydney, said this could be an early signal indicating that the market believes the Fed’s willingness to cut rates will decrease if oil prices continue to soar and eventually lead to higher inflation pressures in the US. Deteriorating risk sentiment has also boosted the US dollar. After Iran’s national security official stated that the country would not negotiate with the US, S&P 500 futures fell 1.5%. President Trump said that bombing actions against Iran will continue until objectives are achieved and called on Iranian leaders to surrender. On Monday, aside from gold, the US dollar was one of the few traditional safe-haven assets to rise, while US Treasuries, the Japanese yen, and the Swiss franc all declined. (Jin10)