NEW YORK: The dollar strengthened against major currencies on Wednesday, buoyed by growing expectations that the Federal Reserve will raise interest rates after hot US inflation data and hawkish remarks from policymakers.
Traders have boosted bets on a 25-basis-point Federal Reserve rate hike in December to 87 percent from about 70 percent a month ago, according to CME’s FedWatch Tool, after US consumer prices rose more than expected in October for a third consecutive month.
The rise in rate expectations is helping support the dollar, said Elias Haddad, global head of markets strategy at Brown Brothers Harriman & Co.
The dollar rose 0.69 percent to 159.83 against the Japanese yen, hitting its strongest in over two months and nearing the psychologically important 160-per-dollar mark.
The euro dropped 0.61 percent to USD1.11, extending losses from the prior session and hitting its lowest since May 2025.
“We’ve got broad-based strength in the dollar largely underpinned by a hawkish shift in Fed fund rates expectations driven by the hot October CPI print but amplified as well by recent comments by Fed officials,” Haddad said.
Recent comments from Fed officials including Governor Christopher Waller and Dallas Fed President Lorie Logan signaled unease over high inflation and the possibility of a large 50-basis-point hike, helping to drive rate bets.
The pound fell 0.47 percent to USD1.33 and was pinned near its lowest point in two weeks, while the dollar strengthened 0.86 percent to 0.832 against the Swiss franc after hitting its highest since mid-October.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, was last up 0.63 percent at 102.85, after hitting its highest since April 2025.
Some brokerages revised their calls on future Fed monetary policy after Tuesday’s data, with Goldman Sachs now expecting hikes in December and March, while Deutsche Bank expects hikes in December, January and March.
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