USA: Dollar Index Extends Pullback.

The dollar index fell to 101.2 on Wednesday, extending the pullback after testing a 15-month high of 101.6 on the prior session after the Federal Reserve held interest rates unchanged. Around one-third of the market had positioned for a hike by the central bank, as mounting pro-inflationary risks and the backdrop of a strong labor market supported the case for hawks in the FOMC. Accordingly, three members of the committee dissented in favor of a hike. The pullback in the dollar took place despite a fresh surge in oil prices as strikes between the US and Iran magnified the risk of a prolonged energy shortage from the Middle East. The implication of higher energy prices on interest rates was transmitted to other G10 currencies later in the month, with soaring natural gas prices supporting the euro and the yen. In turn, the sterling extended its outperformance this year ahead of a likely Bank of England hold.