The U.S. dollar index (DXY) recovered slightly, rising 0.05% after hitting a three-month low, bolstered by better-than-expected economic data. Weekly initial unemployment claims fell by 6,000 to 206,000, defying expectations of an increase to 210,000. The August Philadelphia Fed business outlook survey unexpectedly increased by 6.0 points, reaching a 5.25-year high of 47.4. Additionally, July leading indicators rose by 0.2% month-over-month, surpassing forecasts of 0.1%.
Crude oil prices jumped 2% to a one-month high, stimulating inflation expectations. This environment may affect future Federal Reserve policy, with markets currently pricing a 35% probability of a 25 basis point rate hike at the next FOMC meeting on September 15-16. Meanwhile, the euro fell 0.04% against the dollar, influenced by the dollar’s rebound and rising crude prices, which impact the Eurozone economy.
In Japan, the yen is under pressure as it faces rising crude prices, although July exports surged 23.2% year-over-year. Market expectations now indicate a 78% probability of a 25 basis point rate hike by the Bank of Japan during its September 18 meeting, amidst government support for such a decision to address inflation linked to a weak yen.
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