Traders boost bets on a December Fed rate increase after April inflation data exceeds expectations, lifting the DXY to 99.20.
The US Dollar Index surged to its highest level since April 8, reaching 99.20, as investors priced in a more aggressive Federal Reserve response to persistent inflation. The rally marks the first weekly gain in three weeks, driven by stronger-than-expected Consumer Price Index and Producer Price Index data for April.
Inflation accelerated for the second consecutive month, fueled by rising oil prices amid Middle East tensions. The CME FedWatch Tool now shows nearly a 50% chance of a rate hike in December, up from previous expectations. US Treasury yields climbed to near one-year highs, reinforcing the dollar’s strength.
The dollar also found support from progress in US-China trade discussions, with leaders signaling stronger investment ties. Safe-haven demand further bolstered the greenback as geopolitical risks persisted.