Dollar Hits One-Month High Amid Fed Rate Hike Fears

The US dollar has reached a one-month high as traders weigh a slim but lingering chance of a rate hike by the Federal Reserve at its upcoming meeting. Despite falling oil prices easing inflation concerns, some brokerages believe there is a real risk of the Fed delivering a rate hike this week.

A growing number of major brokerages think there's a 36.3% chance of a rate hike of at least 25 basis points from the Fed at its policy announcement, up from 16% last week. Markets are pricing in an 81% chance for a hike at the central bank's September meeting.

Currency traders expect the US GDP data and the Fed's preferred inflation gauge, core PCE inflation, to provide more clues on the health of the world's biggest economy this week. The Bank of England and Bank of Japan are widely expected to keep interest rates unchanged at their meetings on Thursday and Friday.