Dollar Surges to Seven-Week High as Fed Hikes Rates
The US dollar surged to a seven-week high after the Federal Reserve raised interest rates and signaled further hikes in the coming months.
This move was largely expected, but the tone of new central bank chief Kevin Warsh's statements surprised markets. He validated a hawkish policy path and projected one more rate increase in 2026, causing investors to reprice US Treasury yields higher.
The dollar's strength pushed the euro to $1.1456, near a seven-week low, while sterling remained flat at $1.3377 ahead of the Bank of England's meeting on Thursday. The yen hovered near a two-week low against the dollar as markets awaited the Bank of Japan's decision on Friday.
The dollar index reached 100.33, its strongest level since July 31, and rate futures markets now reflect about a 90% probability of another quarter-point Fed rate hike by year-end, according to CME Group's FedWatch Tool.