Dollar Surges as Warsh Bolsters Rate Hike Bets Amid Hawkish Remarks

The dollar index surged to its strongest level since August 17 as Federal Reserve Chair Kevin Warsh's hawkish remarks boosted bets on a rate hike.

Warsh stated that policymakers would 'have work to do' if they don't get the confidence that inflation is heading down to 2%, indicating further tightening may be needed to curb price pressure.

The comments fueled bets on a September rate hike, with markets raising the implied probability of a move next month to 57% and yields on interest-rate-sensitive two-year US Treasury notes rising to a more than one-month high of 4.33%.