Dollar Surges to Seven-Week High on Hawkish Fed Decision

The US dollar has reached a seven-week high after the Federal Reserve raised interest rates and signaled more hikes in the coming months.

Currency strategist Carol Kong at Commonwealth Bank of Australia said that new central bank chief Kevin Warsh sounded 'more hawkish than expected' and provided guidance on future hikes, causing markets to reprice policy higher and push the dollar up.

The euro fell to a seven-week low at $1.1463, while sterling was flat ahead of the Bank of England's meeting later in the day. The Japanese yen hovered near a two-week low at 155.98 per dollar as markets awaited the Bank of Japan's decision on Friday.

Rate futures markets now reflect about a 90% probability of a follow-up quarter-percentage-point Fed rate hike by the end of this year, according to CME Group's FedWatch Tool. The BOE and BOJ decisions are expected to have significant implications for the dollar index, which measures the greenback against a basket of currencies.