US: Dollar Holds Gains on Hawkish Fed Outlook.

The US dollar index traded around 102.2 on Wednesday, holding onto its sharp gains from the previous session as expectations of further Federal Reserve rate hikes strengthened following hawkish comments from policymakers and stronger-than-expected US inflation data. Consumer prices increased 0.4% in October, exceeding market forecasts of 0.3%, while core CPI rose 0.3% for the third consecutive month, also above expectations of 0.2%. Reinforcing the hawkish outlook, Fed Governor Waller expressed support for additional monetary tightening in December, stating that he would favor a half-percentage-point increase if inflation continues to accelerate. Dallas Fed President Logan similarly indicated that more aggressive rate hikes may be necessary to bring inflation under control. Consequently, markets are now pricing in a 91% probability of a December rate hike, up from 84% a day earlier. Investors are also beginning to factor in further rate increases in January and potentially April.