US Dollar: Stronger as Fed hike path extends – MUFG
MUFG’s Lee Hardman notes the US Dollar is holding a stronger tone after the Federal Reserve began tightening policy, lifting the Dollar Index back above 100.00. Support comes from a sharp rise in US yields, with markets now pricing three more Fed hikes over the next year.
The US Dollar is demonstrating increased strength as the Federal Reserve extends its path of rate hikes, according to MUFG's Lee Hardman. The Dollar Index has surpassed the 100.00 mark following the Fed's decision to tighten monetary policy. This rise is largely driven by a surge in US yields, with market participants pricing in three additional rate hikes over the next year.
Hawkish statements from regional Federal Reserve presidents further bolster expectations for an extended rate hike cycle. Since the Fed's announcement last week to initiate monetary tightening, the US dollar has consistently traded on a stronger note. The dollar index has now climbed back above the 100.00 level for the first time since mid-August, with the next major resistance level at the 101.80 level observed on June 24th.
Support for the US dollar is further bolstered by the upward trend in US yields, which have risen by approximately 55 basis points since late last month as investors adjust their expectations for a more prolonged Fed rate hike cycle.
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