Dollar Gains Hinge on Warsh Rate Hike Signal

The US dollar could continue its recent gains if Federal Reserve Chair Kevin Warsh signals another rate hike is likely after Wednesday's decision, according to Societe Generale.

The greenback DXY has been supported by a risk-averse market, but the move has been modest. It rose from 97.5 before the Gulf conflict began to 101.5 as it developed, but has stayed below 100 since falling to 98 over the summer.

Higher energy costs and expectations that the conflict will drag on have not been enough to push the index back above 100, Societe Generale said.

Markets will focus on how much guidance Warsh gives after the decision. If he does not sound hawkish enough, investors may begin doubting a second hike by year-end, and the dollar could struggle to extend gains.