The dollar index edged up above 112 from a one-week low, remaining close to levels not seen since May 2002, after personal spending and core PCE inflation came in above expectations.
The dollar is on track for its fourth monthly gain and up almost 10% this quarter, supported by expectations that the Federal Reserve would remain aggressive in battling inflation even at the risk of a recession.
The Fed raised interest rates by 75 basis points for a third consecutive meeting on Wednesday while forecasting rates to peak at 4.6% next year with no cuts until 2024, pushing back any dovish pivot that the markets were hoping for in the near term.
This dollar’s strength was seen across the board, with some of the most pronounced buying activity against the British pound and the euro amid growing economic and energy worries.
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