02.09.202602:24:34UTC+00Dollar Strengthens on Fed Rate Hike Bets

The dollar index climbed above 99.7 on Wednesday, its highest level in nearly three weeks, as surging oil prices stoked inflation worries and bolstered expectations of an imminent Federal Reserve interest rate hike. Oil extended gains for a third straight session amid rising tensions between the US and Iran, heightening fears of additional disruptions to Middle Eastern energy supplies. At the same time, Fed Chair Kevin Warsh’s firm stance on tackling inflation strengthened market bets on a rate increase, with traders now assigning roughly a 70% probability to a hike this month. Fed Governor Michael Barr also said on Tuesday that the central bank must be ready to raise rates if inflation does not continue to ease. Investors are now focused on the ADP employment report due Wednesday and the nonfarm payrolls data on Friday for further guidance on the Fed’s policy outlook.