Dollar Soars Ahead of Hawkish FOMC Decision

The US dollar strengthened on Friday despite a higher than expected monthly core inflation reading, which boosted expectations for a Fed rate hike.

Traders now price in a 93% chance of an increase tomorrow, and with surging oil prices adding inflationary pressure, it could make the Fed even more hawkish going forward.

The focus will be on the FOMC decision tomorrow, with the Fed expected to hike rates by 25 bps, which would be the first hike since 2023.

Traders will be attentive to any hawkish surprises, as these could give the US dollar a strong boost on a more hawkish repricing of interest rate expectations.