US dollar rises as markets brace for Fed's big rate hike

The dollar appreciated against major currencies on Monday, trading in a narrow range ahead of a series of central bank meetings this week, led by the Federal Reserve.

Trading was generally subdued as markets in London and Tokyo were closed for a public holiday. World stock markets were jittery and the dollar remained strong amid expectations that the Fed will continue its aggressive tightening path to contain uncomfortably high inflation. "At a high level, the dollar is benefiting from the ongoing sell-off in global equities," said John Doyle, vice president of trading and transactions at Monex USA in Washington. "Pending the Fed's decision, I think the dollar will continue to take cues from overall risk sentiment. We don't think the Fed will hike 100 basis points this week, but the potential is still real," he added. Fed funds futures priced in a 79% probability of a 75 basis point rate hike this week and a 21% chance of a 100 basis point hike at the end of the US central bank's two-day policy meeting, Refinitiv data showed. The dollar index, which measures the currency against its six counterparts, was up 0.4% at 109.98, not far from the 20-year high of 110.79 reached on September 7. This week is also packed with holidays in Japan and the UK on Monday, Australia on Thursday and Japan again on Friday, which could reduce liquidity and lead to sharper price movements. In other currencies, the euro fell 0.3% against the dollar to $0.9984, while sterling weakened 0.4% to $1.1386, near Friday's 37-year low, while the New Zealand and Australian dollars fell 0.8% and 0.5% respectively. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!