ING Outlook: Fed rate hike expectations likely to continue supporting the US dollar; geopolitical risks and energy prices serve as dual drivers, making it difficult to reverse the strong dollar trend in the short term

⑴ ING analyst Chris Turner pointed out in a report that the outlook for a Federal Reserve rate hike may continue to support the US dollar ahead of next week’s interest rate decision announcement. The recent surge in energy prices has further intensified market expectations for tighter US policy.⑵ Turner believes that although a Fed rate hike next week is not the baseline scenario, going against the current trend remains quite risky. Based on observations since this week, he expects the US dollar to continue outperforming other major currencies.⑶ US President Trump has threatened new military strikes against Iran. Geopolitical risks combined with upward pressure on energy prices suggest investors should continue to bet on dollar strength ahead of the weekend. The US Dollar Index is currently at 101.393, having touched a three-week high of 101.544 on Thursday.