Dollar Holds Firm on Fed Rate Hike Bets

2026-05-14 02:01 By Jam Kaimo Samonte 1 min. read

The dollar index hovered around 98.5 on Thursday and was up sharply this week as accelerating US inflation linked to the Iran war reinforced expectations that the Federal Reserve will keep interest rates higher for longer or potentially raise them.

Data released Wednesday showed US wholesale inflation climbed in April at its fastest pace since 2022, following Tuesday’s report indicating consumer inflation rose to 3.8% last month, the highest level since May 2023.

Markets have now fully priced out any possibility of a Fed rate cut this year and are increasingly assigning a higher probability to a rate hike before year-end.

Meanwhile, the US Senate narrowly confirmed Kevin Warsh as Fed chair on Wednesday, with investors assessing whether he will maintain the central bank’s independence.

Elsewhere, President Donald Trump is scheduled to meet Chinese President Xi Jinping, with discussions expected to focus on trade relations rather than the ongoing Iran conflict.



News Stream
Dollar Holds Firm on Fed Rate Hike Bets
The dollar index hovered around 98.5 on Thursday and was up sharply this week as accelerating US inflation linked to the Iran war reinforced expectations that the Federal Reserve will keep interest rates higher for longer or potentially raise them. Data released Wednesday showed US wholesale inflation climbed in April at its fastest pace since 2022, following Tuesday’s report indicating consumer inflation rose to 3.8% last month, the highest level since May 2023. Markets have now fully priced out any possibility of a Fed rate cut this year and are increasingly assigning a higher probability to a rate hike before year-end. Meanwhile, the US Senate narrowly confirmed Kevin Warsh as Fed chair on Wednesday, with investors assessing whether he will maintain the central bank’s independence. Elsewhere, President Donald Trump is scheduled to meet Chinese President Xi Jinping, with discussions expected to focus on trade relations rather than the ongoing Iran conflict.
2026-05-14
DXY Extends Gains After Hot PPI Report
The dollar index strengthened above 98.5 on Wednesday, marking a third consecutive session of gains as investors increased bets that the Federal Reserve will keep interest rates higher for longer amid rising inflation pressures linked to the war in Iran. Market sentiment turned more hawkish after data showed US wholesale inflation accelerated in April to its fastest pace since 2022, driven in part by higher freight and transportation costs stemming from Middle East disruptions. The producer price index climbed 6% year on year, exceeding all forecasts, while the monthly increase was also the strongest since 2022. Core producer prices, which exclude food and energy, rose 5.2% from a year earlier, the largest increase in more than three years. Even if the current ceasefire holds and the Strait of Hormuz reopens soon, economists expect elevated energy and shipping costs to continue weighing on inflation as supply chains and oil production gradually normalize.
2026-05-13
Dollar Extends Gains After Hot CPI Report
The dollar index strengthened above 98 on Wednesday, rising for the third straight session, supported by stronger-than-expected US inflation data that reduced expectations for Federal Reserve interest rate cuts. US consumer inflation rose 3.8% in April, above forecasts of 3.7% and the highest since May 2023, as surging energy prices tied to the Middle East conflict added to price pressures. Markets have largely priced out any Fed rate cuts this year, while expectations for a quarter-point hike in December have climbed to 35%. Investors are now focused on the latest producer inflation report for further signals on how the Iran war is affecting the US economy. Meanwhile, oil prices remained elevated as diplomatic efforts to resolve the US-Iran conflict stalled, keeping inflation risks high. President Donald Trump is also due to meet Chinese President Xi Jinping this week, though he indicated trade talks will take precedence over the Iran situation.
2026-05-13