Dollar Soars Near Two-Week High on Warsh's Hawkish Comments

The US dollar reached a two-week high on Monday, fueled by hawkish remarks from Federal Reserve Chair Kevin Warsh. He stated that the central bank would have 'work to do' if policymakers don't get the confidence they need that inflation is heading down to 2%. This commentary increased bets on a rate hike in September.

Market participants raised the implied probability of a move next month to 57%, with yields on interest-rate-sensitive assets rising to a more than one-month high of 4.33%.

The comments from Warsh have reduced a major drag on the US dollar, said OCBC's FX strategist Sim Moh Siong, adding that it helped rebuild the Fed's credibility and eased concerns about currency debasement.