The dollar index swung to a fourteen month high today, trading as high as 84.519 before paring back towards yesterday’s highs as speculation that an earlier than expected rate rise in the US fuelled demand for the greenback. The dollar has gained substantial support on the upside in recent sessions, particularly against the pound as nervous investors sold sterling after yesterday’s most recent poll results showed the independent Scotland movement gaining traction. The dollar index has gained almost 2% this month, building further on the rally that has seen the currency appreciate 6% since the beginning of January. The pound hit a fresh year-to-date low against the dollar today, selling off towards 1.6065 early on before recovering back above 1.6100 and as a result investors have been reluctant to commit significant positions as they hold out for the macro data due later this week for further clarity.
The risk off attitude resonated deeper in commodity markets with Brent crude futures facing significant resistance to moves above $100/bbl throughout much of the session, with front month futures at the time of writing targeting a close below this symbolic level for the first time since early May last year. The sell-off was exacerbated by concerns regarding slowing Chinese growth after data released on Monday showed a surprise fall in August imports which have weighed heavily on the wider commodity market. Worries of weaker demand and a cooling housing market have also seen spot iron ore prices soften towards $83/tonne, extending the sell-off that was seen throughout August.