Dollar Rallies as Fed Hikes Rates and Signals More to Come

The US dollar index rallied to a 1.5-month high on Wednesday after the Federal Reserve raised interest rates by 25 basis points and signaled another rate hike by the end of the year.

August retail sales rose more than expected, increasing by +1.2% month-over-month, with August retail sales ex-autos rising +1.4% m/m.

The Federal Reserve's decision to raise interest rates was seen as a sign that the economy is growing stronger, despite elevated uncertainty due to geopolitical developments.

Markets are pricing in a 57% chance of another 25 basis point Fed rate hike at the next FOMC meeting on October 27-28.