Dollar Surges to Two-Week High as Warsh Hints at Rate Hike

The US dollar has reached its highest level in two weeks after Federal Reserve Chair Kevin Warsh's hawkish comments fueled bets on a rate hike. The dollar index, which measures the currency against six major peers, ticked down slightly to 99.6.

Warsh said that if policymakers don't get the confidence they need that inflation is heading down to 2%, the Fed will have work to do. This statement has increased the implied probability of a rate hike in September to 57%.

The dollar's strength has also put pressure on the yen, which slipped back through the closely watched 160-per-dollar level. The Japanese currency remains under pressure due to a wide interest rate gap and negative real rates.