Markets now price a 70% chance of a 25 basis point Fed rate hike by September, lifting the dollar to its strongest level since May 2025.
The US Dollar Index rose 0.15% to 101.50, its highest since May 2025, as risk aversion and Fed rate hike expectations fueled demand. The move follows stronger-than-expected June PMI data, with manufacturing at 55.7 and services at 51.3.
Wall Street’s decline, particularly in the Nasdaq, added to the dollar’s strength. US stock index futures traded mixed in early European trading. The CME FedWatch Tool shows a 70% probability of a 25 basis point hike by September.
May New Home Sales data and German IFO business sentiment figures are due later today, which could further influence market sentiment.