FX.co ★ Dollar Holds Gains on Hawkish Fed Remarks

The dollar index hovered near 100.5 on Wednesday, holding at its highest level in eight weeks as hawkish remarks from Federal Reserve officials reinforced expectations for additional interest rate hikes this year. Richmond Fed President Tom Barkin cautioned on Tuesday that inflationary shocks could take time to dissipate, warning that elevated price pressures risk becoming entrenched. Boston Fed President Susan Collins likewise noted in a LinkedIn post that she supported last week’s rate increase, citing concerns that inflation could remain above the Fed’s 2% target. Futures markets are now assigning roughly a 54% probability to another Fed rate hike in October.

On the geopolitical front, oil prices extended their slide for a sixth straight session after President Donald Trump said US officials had a “very good” meeting with Iranian envoys, easing inflation worries and curbing safe-haven demand for the dollar.