In European trading on Monday (October 31), it surged to 110.88, or 0.18%.
Economists at Goldman Sachs Group Inc. reportedly said it could rise to 5% by March 2023, 25 basis points higher than their previous forecast.
The move came after St. Louis Fed President James Bullard signaled at an event that the Fed could raise rates by 75 basis points at each of its November and December meetings.
Barclays, the international investment bank, also said in a report that it expects the pace to be more aggressive, possibly raising the benchmark interest rate above 5% by the end of 2023.
But last week’s rally pushed the 10-year yield back near 4 percent and the rate-linked two-year yield more than 20 basis points below its high for the year, reflecting a belief among some investors that the Fed will ease policy tightening as it considers the impact of a recession.
The dollar index (DXY) was up 0.20% intraday, while Posting its first gain in three days.
In this context, the dollar versus six major indicators benefited from the Fed’s hawkish bets, especially after Friday’s upbeat report on the Fed’s preferred inflation gauge, which saw the US core personal consumption expenditures (PCE) price index rise to 5.1% yoy in September versus expectations of 5.2% vs 4.9% previously.
