FX.co ★ DXY Rises to 8-Week High

The dollar index climbed more than 0.4% to above 101 on Wednesday, reaching an eight-week high after data showed US business activity expanding at its fastest pace in over five years, reinforcing expectations of further Federal Reserve rate hikes. The S&P Global flash US Composite PMI advanced to 58.4 in September, its strongest reading since July 2021, signaling a sharp acceleration in economic activity.

At the same time, Brent crude rose back above $100 per barrel, snapping a five-session losing streak. In interest-rate markets, traders are now assigning nearly a 60% probability to another 25 bp rate increase next month, following last week’s hike, while the implied odds of an additional move in December are around 48%.

Market participants were also keeping a close eye on diplomatic efforts to end the conflict involving Iran. Investors are monitoring progress in US–Iran negotiations, which could bolster risk sentiment if they gain traction.