FX.co ★ Dollar at Nearly 1-Month High

The dollar index extended gains to 102.5 on Wednesday after a 0.5% rise in the previous session, marking its highest level in roughly a month. The advance reflected mounting expectations for a more aggressive pace of Federal Reserve rate hikes in the coming months, driven by stronger-than-expected inflation data and increasingly hawkish signals from Fed officials.

Reinforcing this stance, Fed Governor Christopher Waller indicated that a 50-basis-point hike in December could be justified, while Dallas Fed President Lorie Logan endorsed at least two additional 25-basis-point increases. Futures markets now imply an estimated 86% probability of a 25-basis-point hike at the Fed’s December meeting, with investors also starting to price in further tightening in January and potentially April.

At the same time, oil prices rebounded, paring earlier losses after a two-day slide. The US dollar strengthened against all major currencies, with its most pronounced gains recorded versus the Canadian dollar and the Swiss franc.