Dollar hits 2022 high as Fed rate cut expectations fade

The dollar index surged past 110 on Monday, reaching its highest level since October 2022, extending a 0.6% gain from the year's first week.

Dollar hits 2022 high as Fed rate cut expectations fade

This upward movement came as traders reduced their expectations for Federal Reserve rate cuts in 2024 following a stronger-than-expected U.S. jobs report on Friday. Concerns over inflationary policies under President-elect Donald Trump contributed to a more cautious market outlook. Traders anticipate just 27 basis points of rate cuts this year, a significant decrease from the earlier forecast of 50 basis points. The anticipated quarter-point rate cut is now expected to be delayed until the year's second half.

Inflation data to shape Fed policy as dollar strengthens

Key inflation data, including this week’s CPI and PPI reports, will offer important insights into the Fed’s future policy decisions. The dollar strengthened against most currencies, with the British pound and the Euro seeing the most significant declines.