Traders boost bets on a September Fed rate increase after June meeting signals a hawkish shift, lifting the DXY to monthly highs.
The US Dollar Index (DXY) rose to 101.30 in early European trading Tuesday, extending its largest monthly gain in nearly a year. The move follows the Federal Reserve’s June policy meeting, where officials removed language suggesting future rate cuts and adopted a more hawkish stance under new Chair Kevin Warsh.
Fed funds futures now price a 63% chance of a rate hike by September, up from prior expectations. The shift follows three consecutive months of stronger-than-expected Nonfarm Payrolls (NFP) data, reinforcing the Fed’s policy pivot. Markets anticipate June’s jobs report, due Thursday, to show 110,000 new jobs and a steady 4.3% unemployment rate.
A weaker-than-expected labor report could prompt a dovish reassessment, potentially weighing on the DXY. The index’s strength reflects broad USD gains amid rising rate hike bets.