Dollar Hits Two-Month High as Fed Rate Hike Bets Intensify

The US dollar has reached a two-month high on September 24 after strong manufacturing data and a weak Treasury auction boosted its value. The broad dollar strength pushed the euro to $1.1378, a two-month low, while sterling languished near a three-month nadir at $1.3231.

The dollar index, which measures the US currency against a basket of peers, held near a two-month high at 101.1. A stronger-than-expected purchasing managers' report overnight fanned new price concerns and a poorly received auction of five-year U.S. Treasury notes triggered a fresh round of bond selling.

Five-year yields crossed 5% for the first time since 2007, sparking fears of further rate hikes by the Federal Reserve. Governor Michael Barr said the strong economy and rising inflationary risks mean more policy tightening is likely, pushing traders to bet on another rate hike next month.