FX.co ★ Dollar Towers at Near 2-Month High

The dollar index traded above 101 on Thursday, hovering near its highest level in almost two months, as stronger-than-expected economic data intensified inflation concerns and bolstered expectations of further monetary tightening. S&P Global reported that US private-sector activity in September grew at its fastest pace in more than five years, with both services and manufacturing improving while contending with stronger inflationary pressures. Several Federal Reserve officials also reiterated their support for last week’s rate increase and cautioned that inflation risks remain elevated. In response, markets are now pricing in roughly a 70% probability of another Fed rate hike in October, up from about 55% the previous day. At the same time, uncertainty surrounding US–Iran negotiations continued to support higher oil prices, adding further upward pressure to inflation expectations.