A grinding rally in the dollar is picking up speed, fuelled by a hawkish tilt from the Federal Reserve, rising Treasury yields and concerns over the possibility of a drawn-out battle to raise the US debt ceiling.
The greenback is up 4.7% year-to-date and stands near its highest level in a year against a basket of currencies. Net bets on the dollar in futures markets are at a more than 18-month high, according to data from the CFTC.
Because the dollar is the world’s dominant currency, its trajectory can have far-reaching implications for everyone from corporations to global central banks.
While a robust dollar can be a sign of economic strength, a too-rapid rally in the currency can also hit the balance sheets of US exporters by making their products less competitive abroad and make it more expensive for multinationals to convert their funds back into their home currency.
“The US dollar move we’re seeing at present is due to a…