FX.co ★ Dollar Extends Gains

The dollar index rose to 101.4 on Tuesday, building on a 0.2% gain in the previous session and reaching a three‑month high, as the greenback continued to draw support from expectations of further Federal Reserve tightening.

Efforts to resolve the conflict involving Iran and to fully reopen the Strait of Hormuz have seen little progress. Although oil prices eased on Tuesday, the pullback has done little to dispel concerns that still‑elevated energy costs could stoke inflation and force the Fed to raise rates again.

Robust US economic activity is also underpinning the dollar. However, today’s readings on job openings and consumer confidence came in weaker than expected. Investors now look to Thursday’s PCE inflation data and Friday’s jobs report for clearer signals on the underlying strength of the US economy.

Interest-rate swaps markets are pricing in nearly one full percentage point of additional Fed tightening over the coming year. The greenback is up 1.8% so far in September but remains little changed for the third quarter overall.