The US Dollar Index climbed to a year-to-date high of 103.08 as traders price in back-to-back 25bps rate hikes for December and January, driven by persistent inflation data.
Markets now price around 28bps of Fed hikes by December and 43bps by January, signaling possible back-to-back hikes after stronger US inflation data. This faster tightening path pushed the dollar index to a fresh year-to-date high of 103.08, supporting further dollar strength. Fed speakers, notably John Williams' remarks on accumulating more information, are the key risk to this repricing.
The US Dollar Index reached a fresh year-to-date high of 103.08 as markets accelerate bets on Federal Reserve tightening. Investors now price in 28bps of hikes by December and 43bps by January, anticipating consecutive rate increases following recent strong inflation data.
Markets are pricing a faster pace of Fed rate hikes after stronger US inflation data: around 28bps of hikes are priced by December and 43bps by January, which has pushed the dollar index to a new year-to-date high of 103.08.
The article flags Fed speakers as key: comments like New York Fed President John Williams' call to accumulate more information before deciding policy could reduce the chance of back-to-back December and January hikes and soften the dollar.