Dollar Eyes Longest Winning Streak Since Early 2025 on Oil, Fed Bets
Rising oil prices and expectations of another Federal Reserve hike lifted the Bloomberg Dollar Spot Index nearly 3% over four weeks, Bloomberg reported.
- The Bloomberg Dollar Spot Index is on track for a nearly 3% gain over four weeks, marking its longest winning streak in nearly two years. This consistent performance follows hawkish Federal Reserve signals.
- Rising oil prices tied to new Iranian military activity in the Middle East supported the dollar throughout the week. Fears of supply disruptions from the Strait of Hormuz have pushed investors toward the dollar as a haven.
- Fed Governor Christopher Waller said in Istanbul on Thursday that additional tightening is likely required to reach the 2% inflation target. He cited persistent core PCE inflation and AI-driven cost pressures as factors underpinning the case for tighter policy.
- Fiscal concerns in France and high energy costs pressured the currency to its lowest level since May 2025. "Risk off... continue to push investors," Sarah Ying, head of FX strategy at CIBC Capital Markets, told Bloomberg.
- Futures markets show an 85% chance of at least one rate hike by the Fed's December meeting. Projections from the September meeting indicate 16 of 18 FOMC participants anticipated at least one additional hike this year.
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The strengthening of the dollar continues as strong oil prices press the currencies of energy-importing countries and fears of global inflation persist
The dollar's rise in global markets extended into a fourth week, with the Bloomberg Dollar Spot Index gaining approximately 3 percent during this period. High oil prices, increased risks to energy supply due to conflicts in the Middle East, and expectations regarding the US Federal Reserve's interest rate policy have been key factors influencing the dollar's trajectory.
The US dollar rose for the fourth consecutive week, supported by high oil prices, inflation concerns, Middle Eastern instability, and expectations of further Fed interest rate hikes, while the euro weakened amid economic pressures. Asian gold prices rose more than 1% as the dollar fell. The dollar closed September with strong gains against a basket of major currencies. The dollar remained near its highest level in two months.
The currency continues to be nailed to levels a week ago.
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