The US dollar index held above 103 on Friday after rising for three consecutive sessions and reaching its highest level since April 2025, driven by growing expectations of a more aggressive Federal Reserve tightening cycle. The advance followed stronger-than-expected US consumer inflation data and hawkish remarks from Fed officials, with some policymakers signaling that a larger 50-basis-point rate increase may be needed to rein in inflation.
Futures markets currently imply roughly an 85% probability of a 25-basis-point rate hike in December, with the odds of a larger 50-basis-point move near 15%. Traders are also increasingly pricing in additional rate increases next year. Investors are now awaiting US PPI data for further clues on inflationary pressures.
At the same time, oil prices rebounded after President Donald Trump stated that the US no longer needs a deal with Iran, a development that bolstered safe-haven demand for the dollar.
