US dollar hits eight-week high as Federal Reserve rate-hike bets increase
The US dollar index reached an eight-week high on September 23, supported by expectations of further Federal Reserve interest rate hikes following a policy increase last week.
The US dollar advanced to an eight-week high on September 23, with reports recording the US Dollar Index (DXY) at prints ranging between 100.862 and 100.967, reaching its highest level since late July. Bull Theory noted that the index climbed to 100.892, rising 2.30% over a 13-day span. The currency retained its gains even as Brent crude fell below $100 per barrel, as rising expectations for interest rate hikes outweighed lower oil prices.[1][2][3][4][6]
The dollar's rise followed a Federal Reserve rate increase last week to 3.75%–4.00%, marking the central bank's first rate hike in three years. Policymakers warned that inflation could persist above the 2% target, and officials signaled further rate hikes could be required. Markets priced a 53% probability of another 25-basis-point hike in October, with a December increase fully priced in, while Bull Theory reported an 89% chance of at least one additional hike this year. Separately, ING noted that both the Fed and the European Central Bank could tighten policy further, though an October move appeared more probable for the Fed.[1][3][4][5]
Standard Chartered observed that the central bank's rate increase cleared a key hurdle for dollar buyers, mitigating worries that Chair Kevin Warsh would refrain from tightening amid pressure from President Trump. The bank added that Warsh's confidence in the US economy further bolstered the case for US yields and inbound investment flows.[2]
Key facts
- The US Dollar Index reached an eight-week high on September 23, with reports recording peak levels of 100.862, 100.892, and 100.967.
- The Federal Reserve lifted interest rates to 3.75%–4.00% last week in its first increase in three years, warning that inflation could stay above 2%.
- Markets priced a 53% chance of a 25-basis-point Fed rate hike in October, with a December hike fully priced.
- Bull Theory reported an 89% market probability of at least one more Fed rate hike this year, noting the dollar index rose 2.30% over 13 days.
- The dollar maintained strength even as Brent crude oil prices dropped below $100 per barrel.
- Standard Chartered stated the Fed's hike eased concerns that Chair Kevin Warsh would avoid tightening despite pressure from President Trump.
- ING said both the Fed and the ECB could tighten policy again, with an October increase more likely from the Fed.
Sources · 4 sources
- BT
Bull Theory@BullTheoryioPost on X ·
The US Dollar is strengthening. The Dollar Index just hit an 8-week high of 100.892, up 2.30% in the last 13 days only. Markets are now pricing in an 89% chance of at least one more Fed rate hike this year. A rate hike raises the cost of borrowing, so people spend less and save more. That savings comes out of money that would otherwise go into stocks and other markets. So more savings means the dollar gets stronger, while liquidity moves out of the market and into bank deposits which is a negative signal for stocks.
Open source - *B
*Walter Bloomberg@DeItaonePost on X ·
FED RATE HIKE BOOSTS DOLLAR APPEAL Standard Chartered says the Fed’s rate hike has removed a key obstacle to buying the dollar, easing concerns that Chair Kevin Warsh would avoid tightening despite pressure from President Trump. Warsh’s confidence in the U.S. economy also strengthened the case for U.S. yields and investment flows. The DXY dollar index climbed to an eight-week high of 100.967.
Open source - *B
*Walter Bloomberg@DeItaonePost on X ·
DOLLAR HITS 8-WEEK HIGH AS FED HIKE BETS SURGE The dollar climbed to an eight-week high, with the DXY reaching 100.862 as expectations for further Fed tightening strengthened. Markets now price a 53% chance of another 25bp hike in October, with a December hike fully priced. The dollar remains strong despite Brent falling below $100, suggesting Fed rate expectations are outweighing easing oil prices and improving risk sentiment.
Open source - CB
Coin Bureau@coinbureauPost on X ·
🇺🇸LATEST: The US dollar just hit a two-month high as inflation fears fuel bets on another Fed rate hike. DXY reached 100.89, its highest since July 30 after the Fed warns inflation could stay above their 2% target. Last week, the Fed raised rates to 3.75%–4.00% for the first time since 2023, with projections pointed to another hike this year. CME FedWatch put the chance of an October hike at 53%.
Open source - *B
*Walter Bloomberg@DeItaonePost on X ·
HAWKISH FED SENDS DOLLAR TO TWO-MONTH HIGH The dollar climbed to its highest level since July as Fed officials signaled more rate hikes may be needed to fight inflation. Markets now price a 53% chance of an October hike after last week’s first increase in three years. ING says both the Fed and ECB could tighten again, but an October move appears more likely from the Fed.
Open source - WM
WSJ Markets@WSJmarketsPost on X ·
Dollar Jumps to 8-Week High as Fed Rate-Hike Bets Outweigh Lower Oil Prices https://t.co/d0IZHdDPqB
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