Dollar extends recovery amid recession warnings

Dollar rose in European trade against a basket of major rivals for the third straight session off six-month lows on short-covering.

Dollar is also boosted by haven demand amid spreading warnings about US recession next week due to inflationary pressures, hurting risk appetite. 

The Index

The dollar index rose 0.2% to 105.82, with a session-low at 105.45, after closing up 0.3% yesterday, the second profit in a row, away from six-month lows at 104.11. 

Recession

CEOs of JPMorgan, Bank of America, and Goldman Sachs warned that inflation will threaten consumer demand, and that banks are preparing for deteriorating conditions in 2023.

US recession would no doubt force the Fed to slow down its pace of policy tightening even further, in turn underpinning gold futures.

Fed Rates

After latest strong US services data, markets now put a 25% chance for the Fed to hike rates by 75 basis points, and a 75% chance for a hike by 50 basis points.