Dollar Soars as Hawkish Fed Hints at More Rate Hikes

The US Dollar Index has extended its rally to near 101.00 as financial markets have embraced a hawkish Federal Reserve (Fed) view, according to FXStreet.

A slew of Fed officials have not ruled out the possibility of more interest rate hikes in the remainder of the year due to persistent inflation risks caused by energy shocks and strong demand.

Brown Brothers Harriman's Elias Haddad highlights that Fed officials are reinforcing the prospect of additional tightening, with St. Louis Fed President Alberto Musalem cautioning that 'further rate hikes may be needed to curb inflation', while Chicago Fed President Austan Goolsbee warned of 'more aggressive and more front-loaded' rate hikes if demand is overheating.

The US Dollar Index has gained 0.35% to trade near 100.90, the highest level seen in over seven weeks, as investors await the preliminary US private sector Purchasing Managers' Index (PMI) data for September, which is expected to show a moderate pace of business activity expansion.