US Dollar: Lower energy prices favour a weaker Dollar – MUFG

Brent is falling towards USD90. MUFG’s Lee Hardman notes that the US Dollar has weakened, with the Dollar Index slipping below Friday’s high. Declining oil prices and lower US Treasury yields are relieving pressure on the Fed ahead of the October US CPI report. Futures continue to price in a December Fed rate hike, but fewer moves in 2027.

Lower yields weigh on Dollar

"The US dollar has continued to trade at weaker levels overnight after giving back all of its gains yesterday following the release of the stronger NFP report on Friday."

"The move lower in energy prices is also helping to bring down government borrowing costs."

"If there is further progress towards a US-Iran deal to end the conflict it would help to sustain lower energy prices and ease pressure on major central banks including the Fed to keep hiking rates."

"The main focus today will be the release of the latest US CPI report for October."

"The US rate market still expects the Fed to hike rates again as planned at the end of this year in December but has been scaling back expectations for further hikes in 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)