Dollar Soars Near Two-Week High on Rate Hike Bets

Federal Reserve Chairman Kevin Warsh hinted at further rate hikes to combat inflation, sending the dollar near a two-week high. Markets now believe there's a 57% chance of a September rate hike.

The US central bank will 'have work to do' if policymakers don't get confidence that inflation is heading down to 2%, Warsh said on Friday.

This sparked bets on a September rate hike, with the implied probability rising to 57% and yields on interest-rate-sensitive two-year US Treasury notes hitting over one-month highs of 4.33%.

Warsh's comments have reduced the drag on the US dollar and shifted focus back to economic fundamentals, said OCBC's FX strategist Sim Moh Siong.