Dollar Surges to Two-Month High on Inflation Concerns and Rate Hike Expectations

The US dollar has reached a fresh two-month high due to inflation concerns and increased expectations of Federal Reserve interest rate hikes.

Treasury yields have been rising, with the 30-year US bond yield reaching its highest since June 2004 and the benchmark 10-year note at its highest in nearly two decades. This is following solid economic data that showed a jump in business activity and mounting price pressures.

Data released on Thursday indicated a steadying labor market, with weekly initial jobless claims dipping to 197,000, below the estimated 201,000. However, oil prices surged almost 4% due to supply disruption fears after a Houthi missile attack on Saudi Arabia.

Since the Federal Reserve's recent rate hike of 25 basis points, several officials have hinted at further increases if inflation doesn't moderate. New York Federal Reserve President John Williams and Philadelphia Fed President Anna Paulson both noted that more rate hikes are likely needed to combat inflation.