ChainCatcher, citing Jinshi, reported that strategists at Yuxin Investment Research Institute said the market has lowered, but not completely eliminated, expectations for another Federal Reserve rate increase after the United States and Iran reached a temporary peace agreement. According to the strategists, this has limited the dollar’s decline, preventing its move from becoming as sharp as the moves seen in some other assets.
Markets Price a 68% Chance of a December Hike
Data from the London Stock Exchange Group shows that markets currently see a 68% probability that the Federal Reserve will raise interest rates by 25 basis points in December. The same data also indicates that pricing has fully reflected expectations for action by March of next year, keeping the interest-rate path central to dollar pricing.
The strategists said a rate hike remains possible, and that would make the dollar’s losses less severe compared with other assets, mainly oil prices. The report indicates that while the temporary peace agreement has adjusted part of the macro trading setup, expectations around Federal Reserve policy continue to provide support for the dollar.