US Dollar index hits two-month high on rising rate bets

NEW YORK (Reuters) – Telegram FX Signals The U.S. dollar hit a two-month high on Tuesday in line with higher Treasury yields after hawkish comments from Federal Reserve officials led investors to position for the possibility of further rate hikes.

Regional Fed Presidents James Bullard and Neel Kashkari on Monday indicated that the U.S. central bank may need to continue hiking rates if inflation remains high.

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“The focus is slowly going back towards inflation and all this hawkish Fed speak we’ve been getting and that’s been giving the dollar some support here,” said Edward Moya, senior market analyst at OANDA in New York.

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Powell said on Friday that it is still unclear if rates will need to rise further, as central bank officials balance uncertainty about the impact of past hikes in borrowing costs and recent bank credit tightening with the fact that inflation is proving hard to control.

Euro zone data on Tuesday showed that business growth slowed slightly more than thought this month.

Investors are also focused on when Congress will raise the U.s. debt ceiling. White House and congressional Republican negotiators will meet again on Tuesday to resolve a months-long impasse over raising the government’s $31.4 trillion debt limit.

“Markets are still expecting some sort of deal to be reached,” said Niels Christensen, chief analyst at Nordea. “An agreement should spark some more risk-on sentiment which could be negative for the dollar.”

US Dollar index hits two-month high on rising rate bets