U.S. Dollar Inches Higher Amid Increasing Fed Rate Hike Bets As Crude Oil Prices Surge

(RTTNews) - The U.S. Dollar value ticked higher on Tuesday as traders raised their bets on interest rate hike by the U.S. Federal Reserve at the end of its two-day meeting tomorrow following fresh crude oil supply disruption concerns after Saudi Arabia announced closure of its vital pipeline.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 99.64, up by 0.16 (or 0.16%).

While against the Euro, the USD was trading at 1.154, up by 0.06%, against the GBP, the USD was trading at 1.347, up by 0.18%.

Against the USD, the Japanese Yen was trading at 155.118, down by 0.50%, the Swiss Franc was trading at 0.819, down by 0.18%; and the Canadian Dollar was trading at 1.392, down by 0.15%.

Against one unit of Australian Dollar, the USD was trading at 0.713, up by 0.11%.

In the Middle East, after Saudi Arabia shut its vital East-West pipeline last Friday, fresh concerns of oil and energy supply disruption have emerged, reinforcing inflationary concerns.

Suffering a series of drone attacks on its 1,200-km-long East-West Pipeline by Iran-linked Houthi militant group of Yemen, Saudi Arabia's Ministry of Energy confirmed temporarily closing the line to begin repair works.

Serving as an alternative channel for oil exports, it allowed Saudi Arabia to bypass the Strait of Hormuz.

The extent of damage is not fully known. Saudi Arabia is yet to disclose a timetable for the completion of repair works though experts view that it could take several weeks.

With nearly around 4 million barrels per day of crude oil export at risk, energy traders have priced in supply disruption possibilities for an extended time.

Adding to concerns, Houthis captured the islands of Greater and Lesser Hanish near the Bab el-Mandeb Strait.

The advance of Houthi militants across Yemen's Red Sea coast could potentially offer Iran a leverage to control oil and energy movement in the Arab region.

A planned meeting between the member countries of the Gulf Cooperation Council and Iran, slated to be held in Oman on Monday, was cancelled without any announcement on a future date.

U.S. President Donald Trump announced through Truth Social that Iran wants to make a deal, quickly and badly, and added that the U.S. was open to dialogues.

Dismissing Trump's claims, the secretary of Iran's Supreme National Security Council Mohsen Rezaei announced that there would not be any talks until Iran's conditions are met.

Another claim by Trump yesterday that Russia and Ukraine agreed to halt their attacks on each other's energy installations was refuted by Ukraine. Ukraine's President Volodymyr Zelenskyy affirmed that Ukraine will halt its attacks but only if Russia too stops its attacks.

In Libya, the National Oil Corporation threatened to declare force majeure after security force members (Petroleum Facilities Guard) assigned to protect the country's oil infrastructure shut a pipeline valve and halted production at Hamada and Tahara oil fields.

With production and supply-linked concerns, crude oil traded above the $105-per-barrel range after several months, elevating inflationary pressure.

According to the CME Group's FedWatch Tool, currently investors are betting on a 92.30% chance of a 25-basis-point interest rate-hike to be announced at the end of the two-day meeting of the U.S. Federal Reserve which commenced today while the odds on rates being held at the current level stand at 7.70%.

While the benchmark 10-year Treasury yield moved higher to 5.0266%, crossing the critical 5% threshold, the 30-year Treasury yield climbed to 5.3858%.

On the economic front, the New York Fed's Empire State Manufacturing Index fell by 13 points to 7.60 in September from 20.60 of August, missing expectations of 14.75 and pointing to a moderation in manufacturing activity.

According to the Automatic Data Processing Research Institute, in the U.S., private employers added an average of 16,250 jobs per week in the four weeks ending August 29.