Dollar Surges on Strong US Business Data and Oil Prices

The US dollar has gained strength as US business surveys showed improved manufacturing and services sectors. The S&P Global's flash Manufacturing PMI for September rose to 57, beating a forecast of 53.5, while the Services PMI increased from 56.5 to 58.7. This, combined with rising oil prices due to fears of a US diesel export ban, has supported the greenback.

The Sterling slid more than 0.70% against the US dollar on Wednesday, reaching its lowest level since July 1 at 1.3253. The US Dollar Index (DXY) gained 0.52% and moved above 101.00 for the first time since July 30.

Further rate rises may be required to return inflation to 2%, according to Fed Governor Michael Barr, which has lifted the implied probability of an October Fed hike to 70%. Money markets have adjusted their expectations in response to these comments.