Dollar Soars on Inflation Worries and Rate Hike Expectations

The US dollar has reached a fresh two-month high on concerns over inflation and expectations of further interest rate hikes from the Federal Reserve.

Data released this week showed a jump in business activity and mounting price pressures, which added to worries about inflation. The 30-year US bond yield hit its highest level since June 2004, while the benchmark 10-year note reached its highest in almost two decades.

Several Federal Reserve officials have signaled the possibility of more rate increases if inflation does not moderate. New York Federal Reserve President John Williams said it was reasonable to think that the US central bank might need to raise interest rates again before the end of the year to help bring down inflation risks.

The dollar index, which measures the greenback against a basket of currencies, rose 0.14 percent to 101.27 after hitting 101.34. Expectations for a rate hike of at least 25 basis points at the Fed's October meeting stood at 64.2 percent, up from 55.4 percent a week ago.