US Dollar Soars to Fresh Seven-Week High Amid Fed Rate Hike

The US Dollar (USD) gained momentum on Friday, reaching a fresh seven-week high after the Federal Reserve's (Fed) hawkish interest-rate hike. The Fed raised interest rates by 25 basis points to the 3.75%-4.00% range on Wednesday, with 16 of 18 officials expecting at least one more rate hike this year.

Kansas City President Jeffrey Schmid supported this week's rate hike, stating that recent data suggests inflation is trending above 3%. He noted that the current inflation problem is 'not just about energy,' and that price growth has been 'hot' across a broad range of goods and services.

Despite the US Dollar's gains, the USD/CHF pair turned lower on Friday as traders took profits after a strong weekly advance. The Swiss Franc underperformed, driven largely by its weakness rather than broad US Dollar strength. Prospects of additional Fed rate hikes could widen the interest-rate gap with Switzerland, where the Swiss National Bank keeps its policy rate at zero.