US Dollar Surges as Rate-Hike Bets Mount Ahead of Fed Decision

The US Dollar has gained strength amid aggressive Federal Reserve rate-hike bets for Wednesday's decision, following hotter US inflation reports. The CME FedWatch tool suggests that financial markets have priced in nearly an 87% probability of a quarter-point rate hike at the Fed's September meeting, up from 59% a week ago.

Elias Haddad of Brown Brothers Harriman notes that the Fed is 'poised to deliver a 25bps hike to a target range of 3.75%-4.00% on Wednesday after five straight holds, marking its first hike since July 2023.'

Meanwhile, the New Zealand Dollar has fallen against the US Dollar as it trades around 0.5780 during European hours on Monday. The NZD/USD pair depreciates due to the strong US Dollar and weaker Kiwi.