US Dollar Index Surges on Rising Inflation Expectations

The US Dollar Index (USDX) has continued its upward momentum for a third consecutive session, reaching near 99.50 on Monday's Asian trading session.

This surge is largely driven by rising inflation data and shifting expectations around Federal Reserve policy.

The Consumer Price Index (CPI) rose 0.4% month-over-month and 3.4% year-over-year in August, with the core CPI increasing 0.3% month-over-month, exceeding prior market forecasts.

Following the release of inflation data, interest-rate markets swiftly adjusted their policy expectations, assigning an 86-87% probability to a 25-basis-point rate hike at the Fed's September meeting.

The US Treasury yields have remained high, further bolstering the dollar. Geopolitical tensions in the Middle East have driven up international oil prices, pushing crude oil above $100 per barrel.