Dollar Surge Continues as Fed Hawkishness Takes Hold

The US dollar has gained strength after Fed Chair Kevin Warsh's hawkish speech last Friday. Higher energy prices have further supported the dollar trend, indicating a potential interest rate hike in September.

The Reserve Bank of New Zealand's dovish hike earlier this month and Canada's dovish stance are contrasting with the hawkish Fed narrative. The market is pricing in a 50-basis-point increase by the Federal Reserve next month, despite some concerns about the long end of bond markets.

USD/JPY is expected to spend more time in the 160-162 area due to the hawkish Fed's influence. Meanwhile, USD/CAD is predicted to rise to 1.40 this month amid trade uncertainty and a potential interest rate hike by the Bank of Canada.