Dollar Surges as Fed Hikes Interest Rates by Quarter Point

The Federal Reserve's decision to raise interest rates by a quarter point has had a significant impact on the US dollar and Treasury yields. The Dollar Index jumped 1.1% over the week, its largest weekly surge in over three months, as investors repriced their expectations of further tightening from the Fed.

The two-year yield rose to nearly 4.75%, while the ten- and thirty-year yields reached levels not seen since 2007. The spread between the US 10-year yield and the US 2-year yield dropped to about 0.24% in the week ending September 18 from a high of 0.74% hit in February earlier this year.

Analysts at JPMorgan and Standard Chartered noted that clear interest-rate differentials continue to support dollar appreciation, particularly against lower-yielding global currencies.