Dollar Surges as Trump Takes Neutral Stance on Interest Rates

The US Dollar has strengthened significantly ahead of the Federal Reserve's (Fed) interest rate decision on Wednesday, climbing to near 99.46.

This upward move is attributed to several tailwinds, including a fresh increase in hawkish Fed interest rate prospects and surging oil prices.

Analysts at MUFG/BTMU noted that US August CPI inflation came in higher than expected, prompting a repricing higher of Fed fund rate hike expectations by the market, with investors now pricing an 88% probability of a hike in September.

However, neutral comments from President Donald Trump on interest rates appear to be a key reason behind the jump in the US Dollar. In contrast to his previous criticism of the Fed's chairman for not reducing interest rates, Trump expressed a neutral view on interest rates this time around.