The US dollar remains resilient with a 68% probability of an interest rate hike in December; UniCredit warns that rebound risks persist

⑴ UniCredit Research strategists stated that after the temporary peace agreement between the US and Iran was reached, the market lowered but did not completely eliminate expectations of a Federal Reserve rate hike, which has limited the decline of the US dollar. ⑵ According to institutional data, the market sees a 68% probability of a 25 basis point rate hike in December and fully reflects expectations of action by March next year. ⑶ Strategists pointed out in a report that a rate hike is still possible, which would make the decline of the US dollar appear less drastic compared to the movements of other assets such as oil prices. ⑷ The agreement is only temporary and lays the foundation for a new round of 60-day negotiations on the fate of Iran’s nuclear program. On Monday, the DXY US Dollar Index fell 0.2% to 99.517.