The US dollar index saw little movement on Friday, hovering at 102.1, but it was still on course for a weekly rise of over 0.2%. This was the fourth week in a row that the index had increased, sending the US dollar to its highest level since April 2025. Investors maintained their evaluation of developments in the Middle East and the subsequent implications for energy prices and inflation.
Oil prices softened following US President Trump’s commitment to avoid military action against Iran until after the midterm elections, alleviating worries regarding potential disruptions in energy supply. Nevertheless, markets continued to factor in the likelihood of the Federal Reserve maintaining elevated interest rates for an extended period to address ongoing inflationary pressures.
On the other hand, the chances of the Federal Reserve increasing interest rates by 25 basis points in December were roughly 69%, while the possibility of the Fed holding its existing interest rates this month was approximately 81%.
