Dollar Strengthens Against Major Currencies Amid Fed Rate Hike Expectations

The US dollar has continued its upward trend, reaching July highs and remaining up about 3% for the year to date. The Dollar Index (DXY), which measures the greenback against a basket of major currencies, was last up 0.22% at $101.20.

This move is attributed to several factors, including expectations of further monetary policy tightening by the Federal Reserve, uncertainty in the Middle East, rising oil prices, and resilient US economic activity. U.S. Treasury yields were also higher over the week, with the 10-year yield (US10Y) moving 25 basis points higher at 5.21%, while the 2-year yield (US02Y) advanced 16 basis points to 4.91%.

The Australian dollar (AUD:USD) was among the major currencies that declined, falling by 1.37%. The currency's decline is attributed to the broadly stronger US dollar and elevated US Treasury yields following the Federal Reserve's interest rate hike earlier this month. Meanwhile, the Pound (GBP:USD) remained close to its weakest level in three months due to growing expectations of further Fed rate hikes.