Dollar Jumps Near 2-Month High as Fed Hike Bets Rise, Oil Prices Soar

The US dollar strengthened to its highest level in nearly two months on Wednesday, driven by expectations of further interest rate hikes from the Federal Reserve. The dollar index rose 0.54% to 101.09, reaching its highest point since July 29.

Expectations of a rate hike at the Fed's October meeting have increased to around 75%, up from about 53% before the release of recent data. This was fueled by comments from several Federal Reserve officials indicating that more rate increases are necessary if inflation does not cool down.

The rise in oil prices also contributed to the dollar's gains, as tensions between Iran and the West increased following a statement from Iran's Supreme National Security Council secretary Mohsen Rezaei. Oil prices had been pushed lower by hopes for diplomacy at the UN General Assembly, but have since reversed course.