The US dollar holds a two-week high as inflation and hawkish comments strengthen expectations of a December rate hike.

1. In Asian trading on Wednesday morning, the US dollar hovered near a two-week high. Higher-than-expected US October inflation data, coupled with hawkish remarks from several Federal Reserve officials, reinforced market bets on a rate hike next month. The US Dollar Index remained steady at 102.23, approaching its highest level since October 28; on Tuesday, the Dollar Index had already risen by 0.5%.2. US consumer prices in October were pushed up by rising food and accommodation costs, with the increase exceeding expectations. Chris Weston, Head of Research at Pepperstone, noted that the interest rate market is not only pricing in another rate hike, but is also discussing how much further US monetary policy may ultimately need to tighten, which has a deeper impact on risk assets. The CME FedWatch tool shows that federal funds futures imply a 90.9% probability of a 25 basis-point rate hike in December, up from 84% the previous day; the market assigns a 9.1% chance to a 50 basis-point hike, and believes there is over a fifty-percent chance of another rate hike in January.3. Several voting members of the FOMC expressed concerns about high inflation, prompting traders to almost completely abandon expectations that the Federal Reserve would hold rates steady in December.