U.S. Dollar Rises Amid Fed Rate Hike Speculation

(RTTNews) - The U.S. dollar strengthened against other major currencies in the European session on Wednesday, as the market's anticipation of additional Fed monetary tightening in the upcoming months and investors' confidence regarding the results of new efforts to establish a peace agreement with Iran.

Hawkish comments from several Federal Reserve officials reinforced market expectations that interest rates will stay higher for longer.

The U.S. dollar held near a two-month high after several Federal Reserve officials stressed that additional rate hikes may be needed to lower inflation.

Chicago Fed President Austan Goolsbee noted that supply stocks have become more frequent and more persistent in recent times, and the Fed can longer simply "look through" them as transitory factors, hinting at further tightening.

St. Louis Fed President Alberto Musalem said additional rate hikes may be needed to lower inflation resulting from strong demand as well as a commodity price shock.

Richmond Fed President Tom Barkin and Boston Fed President Susan Collins also stressed that inflation risks outweigh employment risks.

Investors await Trump-Xi meeting scheduled this week.

Meanwhile, U.S. President Donald Trump has expressed support for a possible ban on diesel exports to address the issue of escalating energy costs, sparking debate among U.S. officials and energy experts about economic and global impacts.

Helping ease concerns over a prolonged conflict, media reports suggested that Iran is ready to reopen the Strait of Hormuz within seven days if the United States eases military pressure and lifts its blockade on Iranian ports.

U.S. President Trump reported a productive three-hour meeting between his team and an Iranian delegation in New York, adding they would have another one scheduled in the near future.

Trump said that a deal with Iran may be possible after the midterm elections, but he may instead just decide to "annihilate the Islamic Republic" if no deal is reached.

In the European trading today, the U.S. dollar rose to near 2-month highs of 1.1407 against the euro and 1.3278 against the pound, from early lows of 1.1450 and 1.3345, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.13 against the euro and 1.31 against the pound.

Against the yen and the Swiss franc, the greenback climbed to a 5-day high of 157.92 and a 2-day high of 0.8235 from early lows of 157.44 and 0.8205, respectively. The greenback may test resistance around 159.00 against the yen and 0.84 against the franc.

The greenback advanced to nearly a 2-month high of 1.4092 against the Canadian dollar, from an early low of 1.4064. On the upside, 1.42 is seen as the next resistance level for the greenback.

Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. S&P Global PMI for September and U.S. EIA crude oil data are slated for release in the New York session.