- A gauge of dollar strength climbed to a new high for 2023 Monday.
- Traders are betting that the Federal Reserve will have to keep interest rates at a higher level for longer to crush inflation.
The dollar rose to a new high for the year against its rivals Monday, with the greenback powered higher by investors' bets that the Federal Reserve is nowhere near winding down its battle against inflation.
The $4 – which measures the strength of the buck against six alternative currencies, including the $4 and the $4 – climbed 0.4% over the course of the trading session to surpass its previous 2023 high, set back in March.
The widely-followed gauge is now on a 10-week winning streak, according to data from Saxo Bank.
Investors' belief that $4 in a bid to crush $4 has powered the dollar's gains over the past two-and-a-half months.
Last week, chair Jerome Powell said the central bank now plans to "$4" in its battle against soaring prices, but signaled it could tighten again and is unlikely to start slashing borrowing costs until well into 2024.
When interest rates are high, the dollar tends to strengthen as it becomes more attractive to foreign investors seeking juicier yields.
"The dollar is back in powerlifting mode as expectations that interest rates will be kept elevated for longer in the face of stubborn inflation have pushed the greenback to levels not seen since March," Hargreaves Lansdown's head of money and markets Susannah Streeter said Monday.