Markets price a 48% chance of a December Fed rate hike as officials signal aggressive inflation control measures.
The Japanese Yen weakened further as USD/JPY extended its six-day rally to around 158.90 in Asian trading Monday. The US Dollar strengthened amid growing expectations of a more hawkish Federal Reserve, with officials emphasizing inflation control as a top priority.
Markets now assign a 48% probability to a December rate hike, up from 14% a week earlier, according to the CME FedWatch tool. The Greenback also gained support as a safe-haven asset amid geopolitical tensions, including stalled US-Iran negotiations and rising oil prices.
Japan faces economic pressure from higher energy import costs and producer inflation, compounding the Yen’s decline.