Dollar strengthens as traders increase bets on December Fed rate hike
Growing expectations of a Federal Reserve interest rate hike following high US inflation data have boosted the greenback against major currencies.
The US dollar strengthened against several major currencies on Wednesday as traders increased bets on a December interest rate hike by the Federal Reserve, according to a report by Mint.
The rise in expectations follows US consumer price data for October, which showed inflation rising more than expected for the third month in a row. According to the CME FedWatch Tool, traders have increased bets for a 25-basis-point rate hike in December to 87 per cent from approximately 70 per cent a month ago.
Elias Haddad, global head of markets strategy at Brown Brothers Harriman & Co, said the rise in rate expectations is helping support the dollar. He noted that the dollar's broad strength is supported by shifting expectations for Fed fund rates due to the October consumer price index print and recent comments from officials.
The US dollar index, which measures strength against a basket of six currencies, rose 0.68 per cent to 102.90, reaching its highest level since April 2025. The dollar rose 0.69 per cent to 159.84 against the Japanese yen and strengthened 0.93 per cent to 0.833 against the Swiss franc.
Other currency movements included the euro dropping 0.65 per cent to $1.11, its lowest since May 2025, and the pound falling 0.50 per cent to $1.33. In the cryptocurrency market, bitcoin gained 0.93 per cent to $74,460.41 while ethereum rose 1.19 per cent to $2,079.31.