Dollar rallies to 7-month high ahead of the Fed


Federal Reserve Board Governor Jerome Powell discusses financial regulation in Washington, U.S., October 3, 2017.   REUTERS/Joshua Roberts
Futures Trading Commission (CFTC) Chairman Christopher Giancarlo
and Federal Reserve Board Governor Jerome Powell discuss
financial regulation in Washington

Thomson Reuters

  • The US dollar hit a seven-month high on the Bloomberg
    Dollar Spot Index.
  • The spike comes ahead of an expected Federal Reserve
    rate hike.
  • Follow the dollar
    in real time here.

The US
soared to a seven-month high against a basket of
currencies on Wednesday ahead of the Federal Reserve’s June
meeting, where officials are expected to raise key rates.

The dollar has climbed on the Bloomberg Dollar Spot Index for
three straight sessions, bringing it to its its highest point
since November. 

The Federal Reserve is expected to raise interest rates by 25
basis points at a 2 p.m. meeting Wednesday, after data
showed consumer prices in the US rose last month at the
fastest pace in six years
. Consumer prices rose 2.8%
year-over-year in May, a rate not seen since February 2012, the
Labor Department reported Tuesday.  

Investors have priced in Wednesday’s rate

, according to analysts, and are more so looking
for soft signals in a monetary policy statement by Fed Chair
Jerome Powell that could point to whether

central bank will raise rates one or 

two more
times this year.

“With inflation jumping to a six-year high in May and the
US economic outlook being encouraging, it will be interesting to
see if there is an upgrade to the ‘dot-plot’ forecasts,” Lukman
Otunuga of FXTM said. “If the Federal Reserve expresses optimism
over the health of the US economy and offers fresh insight into
rate hike timings beyond June, this could be viewed as hawkish by
market players.”

Pressure in emerging-market currencies and a weakening
British pound also helped lift the dollar to fresh highs,
according to Vassilis Karamanis of Bloomberg. 

The greenback is up 2% on this year versus a basket of its major

US dollar index