Dollar Soars to Seven-Week High as Hawkish Fed Spurs Market Reaction

The US dollar rose to a seven-week high on Thursday following the Federal Reserve's interest rate hike and projections of further increases in coming months.

The dollar gained strength alongside rising US Treasury yields, after new central bank chief Kevin Warsh joined a unanimous decision to increase interest rates. Market analysts pointed out that Warsh sounded more hawkish than expected, causing the markets to reprice policy higher and pushing the dollar up.

The euro fell to $1.1456, near a seven-week low, while sterling remained flat at $1.3377 ahead of the Bank of England's meeting later on Thursday. The yen hovered near a two-week low at 156.20 per dollar as markets awaited the Bank of Japan's decision on Friday.

The dollar index reached 100.33, its strongest level since July 31, while rate futures markets indicated a 90% probability of a follow-up quarter-percentage-point Fed rate hike by the end of this year.