US Dollar Gains Momentum Amid Fed Rate Hikes and Rebounding Yields

The US Dollar has strengthened against its Canadian counterpart, supported by expectations of further interest rate hikes from the Federal Reserve.

Following the Fed's decision to raise its benchmark interest rate by 25 basis points on Wednesday, investors now see a 55% chance of another 25 bps rate increase at the October meeting, according to the CME FedWatch tool.

The repricing of the US monetary policy outlook has also supported US Treasury yields, which have rebounded to around 4.98%, approaching their highest level since 2007.

On the Canadian side, the rebound in Oil prices provides some support to the Canadian Dollar, limiting gains in USD/CAD. West Texas Intermediate (WTI) Oil has recovered to around $97.30 at the time of writing.