Dollar firms as hot inflation, hawkish Fed talk lift rate-hike bets
TLT•The dollar index rose 0.3% to a four-week high of 102.53 as traders fully priced in a 25-basis-point Federal Reserve rate hike in December after hotter-than-expected US inflation and hawkish Fed comments. The yen fell to its weakest level in over two months, nearing 160 per dollar.
1. Dollar gains broadly
The dollar rose against most currencies on Wednesday, extending gains after US inflation data and hawkish comments from Federal Reserve officials a day earlier boosted expectations for another rate increase. The dollar index was up 0.3% at 102.53, its highest in four weeks.
2. Rate hike bets firm
Traders fully priced in a 25-basis-point rate hike in December, with slim chances of a 50-basis-point increase next month and nearly 75 basis points of rate hikes by September next year. Goldman Sachs expected hikes in December and March, while Deutsche Bank expected increases in December, January and March.
3. Currencies weaken
The yen slipped 0.3% to a more-than-two-month low, nearing 160 per dollar. The euro fell to $1.113, the pound lost 0.2% to $1.33 and the Swiss franc weakened 0.5% to a two-week low; the Australian dollar edged down 0.1%.
