Dollar Hits Two-Month Highs as Fed Hikes Loom

The US dollar has reached its strongest level in two months due to expectations of interest rate hikes. The euro and sterling have fallen, while oil prices have eased from recent highs.

Investors are anticipating further rate rises as several Federal Reserve officials have signaled more policy tightening may be necessary if inflation does not subside quickly enough. According to ING strategist Francesco Pesole, 'It's another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand.'

Brent crude futures have risen 37% since the conflict with Iran began at the end of February, but have edged back above $99 a barrel. Pesole noted that whether this decline is sustained 'remains to be seen.' Crude may be off its recent peaks, but refined product prices are still sky-high.