Bullish Dollar Bets Hit 1-Year High as Traders Price Fed Rate Rise by March
Updated
Updated · Financial Times · Jun 17
Bullish Dollar Bets Hit 1-Year High as Traders Price Fed Rate Rise by March
2 articles · Updated · Financial Times · Jun 17
Summary
Futures wagers on a stronger dollar jumped last week by the most since 2018, reaching their highest level in more than a year as investors revived the “US exceptionalism” trade.
2.9% core inflation in May and 172,000 jobs added helped overturn early-year expectations for Fed cuts, with markets now pricing a quarter-point rate increase by March.
More than a 2% rise in the dollar since the Iran war began initially reflected bets that the US could absorb higher energy prices better than Europe and Asia; the currency has eased only slightly after the truce.
AI-driven enthusiasm, buoyant US equities and SpaceX’s blockbuster IPO have reinforced demand for dollar assets, while the Fed is expected on Wednesday to drop its easing bias under new chair Kevin Warsh.
By contrast, the Eurozone and UK are seen as less able to tighten after the Hormuz shock, strengthening the view that the US will keep outperforming its peers.
The Fed is poised to raise interest rates. Can the AI-driven stock market rally survive the end of the cheap money era?
With a record $28 trillion in foreign debt, is the surging US dollar a sign of true economic strength or a precarious bubble?
As the AI boom's energy demand soars, can the US economy escape the inflation pressures already hitting consumers at the gas pump?
The Dollar’s Surge in 2026: Fed’s Hawkish Pivot, Geopolitical Shocks, and Global Market Volatility
Overview
As of mid-June 2026, financial markets are undergoing a major shift, with the U.S. dollar strengthening and gold prices falling. This change is mainly driven by growing expectations of further interest rate hikes from the Federal Reserve, which is taking a more aggressive, hawkish stance under new leadership. Recent strong U.S. jobs data has reinforced this outlook, giving the Fed confidence to prioritize inflation control. As a result, the dollar is rising, gold has dropped to multi-month lows, and investors are facing increased market volatility and new challenges in both domestic and global economies.