Dollar gains as hot inflation, hawkish Fed talk lift rate-hike bets
TLT•The dollar rose 0.2% to 102.4 on Wednesday after US inflation and hawkish Federal Reserve comments strengthened rate-hike bets. Traders fully priced in a 25-basis-point December increase.
1. Dollar extends gains
The dollar rose against most currencies on Wednesday, extending the previous day’s gains after US inflation data and hawkish Federal Reserve comments strengthened expectations for further rate increases. The dollar index was up 0.2% at 102.4, nearing a high not seen in about two weeks.
2. Currencies weaken
The euro slipped to $1.114, the pound fell 0.2% to $1.332, and the Swiss franc weakened 0.4% to a two-week low. The yen briefly touched a seven-week low, while the Australian dollar rose 0.1%, the only G10 currency to gain against the dollar.
3. December hike priced in
Traders fully priced in a 25-basis-point rate hike in December, with slim chances of a 50-basis-point increase. Goldman Sachs expected hikes in December and March, while Deutsche Bank expected increases in December, January and March.
