The dollar climbed higher for the first time in nearly a week as investors weighed the likelihood of a rate hike from the Federal Reserve during the central bank’s monetary policy meeting this week. The Fed is not expected to raise rates, but a future hike later this year is not off the table.
The greenback rebounded after falling to its weakest level since October as a string of positive economic data showed the world’s largest economy continuing to recover despite a sluggish global economy. Citigroup’s (C) Economic Surprise Index, which tracks data performance relative to market sentiment, climbed to a four-month high.
An improved economic outlook has pushed futures traders to price a 51% chance of a rate increase by June, 6% higher than one month ago.
The Dollar Spot Index gained 0.2% to 1,203.74. Last week, the index closed at its lowest level since October.
Traders are projecting a near-zero chance that the Fed will raise rates at its meeting this week.
Meanwhile, oil producers hinted at a meeting in April that may put a freeze on output at January’s levels to help stabilize the market. A few OPEC members had suggested that a meeting would take place in late March in Moscow. However, the talks are now more likely to take place in Doha, the capital of Qatar.
A meeting in Doha makes sense, as Qatar is the president of this year’s OPEC ministerial conference. However, if many of the important producers fail to agree to attend and freeze output levels ahead of time, the meeting is not likely to take place.
Russia, Saudi Arabia, Qatar and Venezuela proposed an agreement to cap oil output in February to reduce growing stockpiles across the globe. Crude prices have seen gains since the initial meeting in February, and have climbed over 40% since falling to a 12-year low in January.
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