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Internationally Dollar Firms Up on Hawkish Fed Outlook

The dollar index firmed up above 108 on Monday, approaching a 20-year high of 109.3 reached in July, underpinned by expectations that the Federal Reserve will continue to aggressively raise interest rates to bring down inflation.

Among the most hawkish statements so far, St. Louis Fed President James Bullard said Thursday he is considering support for a third straight 75-basis point rate hike in September and added he is not ready to say the economy has seen the worst of the inflation surge.

Richmond Fed President Thomas Barkin also said Friday the “urge” among central bankers was towards faster, front-loaded rate increases. Still, markets are currently priced for a slightly higher chance of a more modest 50 basis point rate hike in September.

Traders now look forward to Fed Chair Jerome Powell’s speech at this week’s annual Jackson Hole symposium for more clues on the central bank’s rate hike path.V