Fed Hike Expectations Soar as Dollar Rally Continues

The Federal Reserve is poised to begin a cycle of rate rises, which could have significant implications for the US dollar. The USD index has been rallying in recent days, with expectations of a federal funds rate hike at 92%, up from 61% a week earlier.

However, some market participants are warning that a single rate hike may not be enough to slow inflation, which remains elevated due to strong labor market and energy prices. In fact, the White House has urged the Fed not to raise rates, citing low core inflation figures since 2021.

The central bank is expected to announce its decision on Wednesday, with investors closely watching for clues on the direction of monetary policy. The FOMC's updated forecasts and Kevin Warsh's press conference are likely to provide important guidance on the Fed's intentions.