Dollar Strengthens as Warsh Hints at Rate Hike

The US dollar has strengthened against major currencies after hawkish comments from Federal Reserve Chair Kevin Warsh. Market expectations of a rate hike in September have risen to 57%, according to IDNFinancials.

Warsh emphasized the need for action if inflation does not move towards the central bank's target of 2%. He said, 'The US central bank will 'have work to do' if policymakers do not get the confidence they need that inflation is moving down towards 2%.'

The comments have supported the yield on two-year US Treasury bonds, which held at around 4.33%, its highest level in more than a month.

Sim Moh Siong, a foreign exchange strategist at OCBC, said Warsh's defence of the inflation target has eased pressure on the dollar and shifted focus back to economic fundamentals.