Dollar Soars to Two-Month High on Inflation Worries and Fed Hike Expectations

The US dollar has reached a fresh two-month high as Treasury yields rise and expectations of further Federal Reserve interest rate hikes strengthen. This comes after hawkish remarks from several central bank officials and solid economic data.

On Thursday, the dollar index hit 101.39, its highest since July 29, as it rose 0.15% to 101.28. Treasury yields continued to climb, with the 30-year US bond yield at its highest since June 2004 and the benchmark 10-year note at its highest in nearly two decades.

Data on Thursday showed a jump in business activity along with mounting price pressures. Initial jobless claims dipped by 1,000 to 197,000, below the 201,000 estimate of economists polled by Reuters.

Several Federal Reserve officials have flagged the possibility of more rate increases if inflation does not moderate. New York Federal Reserve President John Williams and Philadelphia Fed President Anna Paulson noted that more rate hikes were likely needed.