The dollar index (DXY) rose by 1.29% today, reaching a 3.25-month high, driven by soaring oil prices, which hit an 8.5-month high, and increased inflation expectations. Market forecasts indicate a decrease in anticipated Federal Reserve rate cuts this year, now pegged at 37 basis points, down from 60 basis points last Friday. NY Fed President John Williams stated that further interest rate cuts will be considered if inflation slows significantly.
In the Eurozone, February CPI increased by 1.9% year-on-year, exceeding expectations of 1.7%, while core CPI rose by 2.4% against a forecast of 2.2%. Additionally, European natural gas prices surged by 24% today, reaching a three-year high and raising concerns over economic growth and inflation. The euro fell by 1.30%, hitting a 3.25-month low, as the dollar’s strength dampened its value.
Meanwhile, in Japan, the yen fell to a five-week low against the dollar amid rising crude oil prices and an unexpected increase in the jobless rate to 2.7%. Japan’s Q4 capital spending rose 7.3% year-on-year, higher than the anticipated 3.9% growth. The markets are currently estimating an 8% chance of a Bank of Japan rate hike at the next meeting on March 19.
