Forex-Dollar jumps to near two-month high on Fed outlook, oil climb

The US dollar rose to its highest level in nearly two months on Wednesday as investors priced in a rate hike cycle from the Federal Reserve, while oil prices jumped as comments from Iran cast doubt on progress in peace talks.

In the wake of the central bank's rate hike last week, comments from several Federal Reserve officials have also flagged the possibility of more rate increases if inflation does not cool.

On Wednesday, Federal Reserve Governor Michael Barr said the US central bank took an important step last week to "recalibrate" short-term borrowing costs to bring down inflation, and will likely need to deliver further interest rate hikes.

"It's a rate story right now," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman in London.

"What's driving the dollar higher is a follow through from the hawkish Fed hike that we got last week and that's just given the dollar some renewed momentum. This week there hasn't been much data, or policy relevant data, but what was interesting is the comments from Fed officials, they're basically all toeing the same line that more tightening is in the pipeline."