The dollar index (DXY) increased by 0.28% on Monday to a 1.5-week high, driven by falling stocks and rising liquidity demand. The market is pricing in a 92% chance of a 25 basis point interest rate hike at the upcoming Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday.
The euro fell to a one-month low against the dollar, down 0.36% as a stronger dollar and rising crude oil prices, now at a 3.75-month high, weighed on the Eurozone economy. The European Central Bank (ECB) is expected to raise rates by 25 basis points at its October 29 meeting, with current market expectations at 69%.
The Japanese yen strengthened by 0.36% even as Japan’s July industrial production was revised downward from +0.1% to -0.2% month-over-month. Expectations for a 25 basis point increase in the Bank of Japan (BOJ) rate are high at 97%, influenced by ongoing government interventions to support the yen amid inflationary pressures.
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