Dollar Hits Two-Week High on Hawkish Fed Expectations
The US dollar has reached a two-week high against major FX rivals as investors prepare for the Federal Reserve's latest policy decision. The greenback traded near $99.70 on Tuesday, supported by higher oil prices, rising Treasury yields, and weaker appetite for risk.
A 93% probability of a quarter-point rate increase has been assigned to the Fed's decision, which would be its first hike in more than three years. Strong August employment figures, firmer inflation, and renewed energy pressure have led markets to reassess the case for leaving rates unchanged.
The benchmark 10-year Treasury yield hit 5.02% on Tuesday, making dollar-denominated bonds more attractive and encouraging capital inflows while raising borrowing costs across the global economy.