Dollar Gains Strength as Investors Bet on Hawkish Fed

The dollar gained strength on Wednesday as investors continued to bet on a hawkish Federal Reserve. The British pound fell 0.40% to 1.3292, while the euro dropped 0.31% to 1.1414. Francesco Pesole, an FX strategist at ING, said the dollar's resilience is 'another sign that the Fed story is dominant.'

The Fed's hawkish commentary has kept the greenback in demand despite softer oil prices. Richmond Fed President Thomas Barkin argued that a single rate hike may not be enough to tame inflation and that resilient labor market conditions should keep consumer spending supported.

High-frequency jobs data reinforced this view, with initial jobless claims falling below 200,000 and ADP reporting a pickup in hiring in early September. Markets are now watching Wednesday's S&P Global PMIs, which may firm up October rate-hike bets.