U.S. Dollar Climbs Amid Rising Expectations Of Fed Rate Hike

(RTTNews) - The U.S. Dollar value moved higher on Wednesday with market participants pricing in a tighter monetary policy by the U.S. Federal Reserve following yesterday's inflation numbers, hawkish comments by the central bank officials, and the ongoing U.S.-Iran standoff.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 102.91, up by 0.68 (or 0.67%).

While against the Euro, the USD was trading at 1.109, up by 0.66%, against the GBP, the USD was trading at 1.327, up by 0.52%.

Against the USD, the Japanese Yen was trading at 159.809, down by 0.68%, the Swiss Franc was trading at 0.833, down by 0.97%; and the Canadian Dollar was trading at 1.425, down by 0.44%.

Against one unit of Australian Dollar, the USD was trading at 0.685, up by 0.28%.

Today, the U.S. Mortgage Bankers Association's Purchase Index increased to 141.20 on November 6 from 131.40 of the previous week.

Yesterday, the U.S. Consumer Price Index for October increased 0.40%, above economists' expectations. The core consumer price index increased by 0.30%.

The U.S. Federal Reserve left the federal funds rate unchanged in the 3.75% to 4.00% range at its October meeting.

Several senior officials of the U.S. Federal Reserve have separately voiced their support for interest rate hikes.

Earlier this week, Richmond Fed President Tom Barkin and Chicago Fed President Austan Goolsbee cautioned on the need to contain inflation.

Yesterday, Fed Governor Christopher Waller preferred to see a quarter-point hike in December.

Dallas Fed President Lorie Logan stated that the central bank has to execute at least two more quarter-point rate increases, possibly at a faster rate.

Federal Reserve Governor Michelle Bowman remarked that with signs of persisting inflationary pressures, the central bank has work to do to rein in inflation.

Philadelphia Fed President Anna Paulson advocated a gradual approach to rate hikes.

According to the CME Group's FedWatch Tool, currently investors are betting on a 89.60% chance of a 25-basis-point interest rate hike at the upcoming meeting of the U.S. Federal Reserve. The odds on a half-point hike stand at 10.40%.

Of note, traders have fully discounted the possibility of the Fed leaving the rates untouched.

The efforts for securing an agreement between the U.S. and Iran on a framework of negotiations have reached a crucial point.

Yesterday, the Secretary of Iran's Supreme National Security Council Major General Mohsen Rezaei stated that after presenting its seven conditions to the U.S., Iran is still waiting for the U.S. response.

Rezaei remarked that the U.S. made false claims on negotiations to bring down the oil prices in the U.S.

Rezaei vowed that Iran would not allow the removal of even a single particle of enriched nuclear material out of the country.

In an interview with Al Jazeera, Iranian parliament's speaker Mohammad Bagher Ghalibaf stated that Iran has provided the U.S. with a clear and transparent response that outlines Iran's demands. He added that an agreement is possible only if the U.S. does not undermine Iran's trust.

These remarks stand in contrast to the reconciliatory stand taken by U.S. President Donald Trump over the past few days, which hinted at the possibility of a deal between the two nations.

On Sunday, Trump stated that new attacks on Iran would be highly unlikely if Qatar's attempts to secure a deal show some progress.

Yesterday, Trump stated that he had conceded to the request of several Arab nations to maintain status quo in Iran. He was also optimistic about a positive momentum in the efforts to end the conflict.

The Strait of Hormuz crisis remains unresolved, and crude oil prices soared again today due to concerns of supply disruption for more months.