Dollar starts to come back into prominence, as weakening jobless claims, higher energy prices, and Fed promises of continued rate hikes take their toll.

Dollar back on the rise as Kashkari warns of continued rate hikes

“Sterling has been under pressure over the course of the day, with dollar strength helping to weaken GBPUSD after a week of upside. With sterling having recovered from the volatility driven by Kwarteng’s mini budget, the focus returns to the question of when the dollar dominance will resume. Recent calls for the Fed to slow their tightening process in response to a burgeoning dollar-led crisis in Europe appear wide of the mark, with Kashkari stating that tightening will continue until inflation starts to reverse. Quite how steadfast the Fed will be in the face of economic suffering could be tested soon enough, with today’s jump in unemployment claims bringing concerns ahead of Friday’s jobs report.”

OPEC production cut raises risks of prolongued inflationary pressures 

“Joe Biden has stated his disappointment over the surprise 2 million barrels per day production cut from OPEC+, with many seeing this as a Saudi decision to favour Russian interests over the West. With the Western world having to take drastic measures that will squeeze economic growth in a bid to drive down inflation, the timing of this production cut highlights a disregard for the interests of the US and Europe. Unfortunately, we are starting to see natural gas and crude oil gain ground, with fears around rising commodity prices likely to return as demand rises into the Winter period.“

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