US Dollar Index climbs to 13-month high near 101.50 as strong data reinforces Fed rate-hike expectations

VG Markets · 2026-06-24T07:13:32Z
US Dollar Index climbs to 13-month high near 101.50 as strong data reinforces Fed rate-hike expectations

The US Dollar Index (DXY) advanced to a fresh 13-month high near 101.50 on Wednesday, extending gains for a third consecutive session as resilient economic data and rising Federal Reserve rate-hike expectations continued to support the greenback.

The latest move higher followed stronger-than-expected US business activity data. According to S&P Global, the preliminary June Composite PMI rose to 52.2, up from 51.5 in May, signalling that economic activity remains firmly in expansion territory despite elevated borrowing costs.

Manufacturing remained a standout performer. The Manufacturing PMI climbed to 55.7, beating both the previous reading of 55.1 and market expectations of 54.8. Meanwhile, the Services PMI improved to 51.3 from 50.7, suggesting consumer and business demand remains relatively resilient.

The stronger data reinforced the view that the US economy continues to outperform many of its developed-market peers, supporting demand for dollar-denominated assets.

Markets have also become increasingly hawkish on the Federal Reserve outlook. According to CME FedWatch data, traders now see an 86.1% probability of at least one Fed rate hike by December, compared with roughly 61% before last week's FOMC meeting. The repricing followed signals from several Fed officials that inflation risks remain elevated despite signs of slower growth.

Geopolitical developments provided an additional layer of support. While US officials suggested recent talks with Iran had produced progress on nuclear inspections, Iranian authorities denied making any new commitments. The mixed messages have kept uncertainty elevated, encouraging investors to maintain defensive positioning in the US dollar.

Attention now turns to Thursday's release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge. A stronger-than-expected reading could further reinforce expectations for tighter monetary policy and potentially support another leg higher in the dollar.

Key drivers

  • DXY reaches a fresh 13-month high near 101.50.
  • US Composite PMI rises to 52.2, signalling continued expansion.
  • Manufacturing PMI jumps to 55.7, beating forecasts.
  • Markets price an 86.1% chance of a Fed hike by December.
  • US PCE inflation data due Thursday.

Sources: S&P Global PMI, CME FedWatch, Federal Reserve. For informational purposes only — not investment advice.