Dollar Rises on Rate Hike Expectations Amid Ongoing Global Tensions

The US dollar has reached a two-month high due to rising expectations of interest rate hikes in the near term. This trend is driven by hawkish rhetoric from major central banks, particularly the Federal Reserve, which has signalled further policy tightening may be necessary if inflation does not subside quickly enough.

Oil markets remain volatile, with Brent crude futures edging back above $99 a barrel after a five-day stretch of declines. This price increase is largely due to ongoing tensions in the Middle East and concerns about global inflation.

The dollar index, which measures the US currency against six others, was 0.24-per-cent higher at 100.79. The euro fell to its lowest since late July, trading down 0.25 per cent at $1.142. Sterling was down 0.3 per cent at $1.3305.

ING strategist Francesco Pesole noted that the recent barrage of rate hikes and hawkish rhetoric from major central banks has taken centre stage in currency markets. He stated, 'It's another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand.'