Dollar Index Soars on Fed Rate Hike Expectations

The US Dollar Index (DXY) has pushed to its highest level since late July, reaching almost 100.70 on Wednesday. This surge is largely attributed to the Federal Reserve's (Fed) indication of another interest rate increase this year. The Fed raised rates on September 16 and signalled at least one more hike, which officials have continued to back up in recent days.

The lower price of crude oil has also contributed to the Dollar's rise. The commodity fell after a report that Iran would allow ships through the Strait of Hormuz within a week, provided the US ends its blockade and military operations in the area. Cheaper crude oil means less inflation, which reduces the likelihood of further rate increases by the Fed.

Minneapolis Fed President Neel Kashkari has stated that inflation is too high across the entire economy, not just due to the price of crude oil. Chicago Fed President Austan Goolsbee and St. Louis Fed President James Bullard have also made similar comments.