Dollar Hits Seven-Week High as Fed Hikes Rates Amid Global Central Banks' Tightening Stance

The US dollar strengthened to a seven-week high on Thursday following the Federal Reserve's decision to raise interest rates and hint at more hikes in the coming months.

Currency strategist Carol Kong from Commonwealth Bank of Australia attributed the dollar's surge to the Fed's new central bank chief, Kevin Warsh, who sounded 'more hawkish than expected' and provided guidance on future rate hikes.

The dollar index, which measures the greenback against a basket of currencies, rose to 100.3, near its strongest since July 31.

In contrast, the euro dipped to $1.1463, nearing a seven-week low, while the Japanese yen hovered near a two-week low at 155.98 per dollar as markets await the Bank of Japan's decision on Friday.

The Fed's rate hike decision also pushed Treasury curves flat, with yields on interest-rate-sensitive two-year notes reaching their highest level since 2024 at 4.7153%.