Fed Rate Hike Bets Lift U.S. Dollar

(RTTNews) - The U.S. dollar appreciated against its major counterparts in the New York session on Friday, in response to comments from several Federal Reserve officials affirming the need for more policy tightening to battle high inflation.

In an interview with the Wall Street Journal, St. Louis Fed President Bullard said that he supported another 75 basis-point rate hike next month and wanted rates to get to 3.75% to 4.00% by end of the year.

In addition, San Francisco Fed President Mary Daly said that it would be appropriate to raise rates by either 50 basis-point or a 75 basis-point in September to bring inflation down.

U.S. treasury yields climbed following hawkish Fed remarks, with the benchmark 10-year yield touching 2.96 percent. Yields move inversely to bond prices.

Investors worry that aggressive rate hikes to curb high inflation could trigger a recession.

The greenback climbed to a fresh 5-week high of 1.1796 against the pound and more than a 3-week high of 137.23 against the yen, up from its early lows of 1.1936 and 135.71, respectively. The next possible resistance for the greenback is seen around 1.15 against the pound and 139.00 against the yen.

The greenback touched 0.9597 against the franc, its highest level since August 8. On the upside, 0.98 is likely seen as its next resistance level.

The greenback firmed to a 5-week high of 1.0042 against the euro and a 2-week high of 0.6870 against the aussie, recovering from its previous lows of 1.0096 and 0.6920, respectively. The greenback is seen finding resistance around 0.995 against the euro and 0.67 against the aussie.

The greenback advanced to 1.3004 against the loonie and 0.6183 against the kiwi, setting more than 4-week highs. The currency is likely to challenge resistance around 1.32 against the loonie and 0.60 against the kiwi.