Dollar Hits Two-Month High as Rate-Hike Bets Surge on Strong US Data
The US dollar held near a two-month high as stronger-than-expected US manufacturing data revived inflation concerns and boosted rate-hike bets. The strong economy and rising inflation risks may require further rate hikes, according to Fed Governor Michael Barr.
CME FedWatch pricing now implies almost a 70% chance of an October increase, up from about 50% a week ago. This has contributed to the dollar's gains, with the USD/JPY pair reaching around 157.94, close to its weakest level in three weeks.
The Japanese yen steadied near a three-week low after Japan returned from holidays, despite a jump in Japanese yields. Markets continue to assess whether the BOJ's recent rate increase was sufficiently hawkish, and traders remain alert to possible intervention.