Dollar Surges as Fed Bets Spark Two-Month High

The US dollar is on track for its first back-to-back weekly gains in over three months as Treasury yields surge and markets price further Federal Reserve rate hikes.

Strong economic data, concerns over energy supplies, and hawkish comments from Fed officials have reinforced expectations of further tightening, pushing the dollar index to a two-month high. The index has gained more than 1% this week and is trading at around 101.2 on Friday.

The stronger dollar has weighed on other currencies, with the euro falling as low as $1.1370, its weakest level in two months, and sterling near a three-month low of $1.3220. Despite concerns over the US fiscal position and uncertainty surrounding policymaking, higher yields have supported the dollar's advance.

Oil prices edged lower on Friday but remained close to a one-week high after a Houthi missile attack on Saudi Arabia revived concerns about potential supply disruptions and associated inflation risks.