DXY Dollar Index Hits Yearly Highs as Fed Hawkishness Takes Centre Stage

The US Dollar Index (DXY) has been testing its yearly highs at around $101.80, according to ING's Chris Turner.

This strength in the dollar is being driven by solid US activity data, which supports the Federal Reserve's hawkish stance on interest rates.

The market is pricing in a need for the Fed to take policy into restrictive territory, as the cyclical story takes centre stage with the US economy performing reasonably well.

Firming up this view is consumer spending data holding up and signs of accelerating payroll growth, according to ADP's monthly report released yesterday.