Dollar Surges as Warsh Boosts Rate-Hike Bets to Near Certain
The US dollar has reached its highest level in two weeks due to bets on a rate hike. Federal Reserve Chairman Kevin Warsh's recent comments have boosted expectations of tighter monetary policy, with markets now predicting a 57% chance of a September rate hike.
Warsh stated that the Fed will 'have work to do' if inflation doesn't meet its target of 2%. This has led to an increase in two-year US Treasury yields to their highest level in over a month.
The euro and sterling have edged up, but remain on track for their second monthly gains. The dollar index, which measures the US currency against six major peers, has ticked down slightly after rising 0.6% last Friday.
Oil prices have also risen, with Brent oil increasing nearly 2% following a US strike on Iran's Larak Island. This has added to demand for the dollar, which is now near its strongest level since August 17.