Dollar Jumps on Hawkish Fed Outlook and Oil Price Surge

The US dollar rose to nearly a two-month high on Wednesday as investors anticipated further interest rate hikes from the Federal Reserve. This comes after the central bank's rate hike last week, which sparked comments from several Fed officials hinting at more increases if inflation doesn't cool.

Federal Reserve Governor Michael Barr said the central bank took an important step to 'recalibrate' short-term borrowing costs to bring down inflation and will likely need to deliver further interest rate hikes. This hawkish stance is driving the dollar higher, with Elias Haddad, global head of markets strategy at Brown Brothers Harriman, stating that 'it's a rate story right now.'

The dollar index rose 0.54% to 101.09 after hitting 101.1, its highest since July 29. Expectations for a Fed rate hike by at least 25 basis points at the October meeting shot up to about 75%, according to LSEG data.