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Dollar Index stays firm as hawkish Fed bets lift rate hike odds

The CME FedWatch Tool shows a more than 70% chance of an October rate hike, up from 57.6% last week.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the dollar against six major currencies, edged lower but stayed in positive territory, trading around 101.10 during European hours on Monday, according to FXStreet.

FXStreet reports the greenback’s strength is being supported by hawkish comments from Federal Reserve officials, as markets increasingly price in further policy tightening ahead of upcoming US employment data and the Fed’s preferred inflation measures.

The outlet also cites remarks from Cleveland Fed President Beth Hammack warning against letting elevated prices become normal, and Philadelphia Fed President Anna Paulson saying additional rate increases could still be warranted.

Reflecting the shift in expectations, FXStreet says the CME FedWatch Tool indicates a greater than 70% probability of a rate hike at the October Fed meeting, rising from 57.6% last week and 17.7% a month ago.

Latest closeDollar index 101.03 ▼0.2%

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