Inflationary Pressures Reignite Rate Hike Expectations, Dollar on Track for Biggest Weekly Gain in Two Months

Odaily Odaily reports that the U.S. dollar is on track for its best week in two months, following U.S. data showing rising inflationary pressures that could force the Federal Reserve to consider interest rate hikes in the coming year. The dollar index DXY has risen over 1% this week, poised for its best weekly performance since mid-March. The U.S. Treasury market has been rattled by two consecutive inflation reports this week that came in higher than expected, prompting a Fed official to state that the U.S. is "facing an inflation problem." Money markets are now beginning to price in a rate hike by the Fed this year, a stark contrast to the widespread expectation of rate cuts or looser policy just a month ago. Monex FX trader Andrew Hartzett commented, "This is the combined result of renewed escalation in the Middle East (pushing oil prices higher) and U.S. inflation data coming in above expectations." (Jin Shi)