Traders now assign a 70% probability to a September Fed rate increase after strong US economic data and hawkish signals.
The US Dollar Index (DXY) reached 100.40, its highest level since May 2025, up 0.4% as Fed rate hike bets intensified. The move followed a break above the 100.00 resistance, ending weeks of consolidation.
Recent US economic data reinforced expectations for tighter policy. The S&P Global Services PMI rose to 51.3, while Manufacturing PMI climbed to 55.7, both exceeding forecasts. The four-week average of ADP Employment Change increased to 30.75K from 26.5K.
Markets now price a 70% chance of a September rate hike, per the CME FedWatch Tool. Focus shifts to Thursday’s PCE inflation report and Q1 GDP revision for further policy clues.