The US dollar has reversed four consecutive days of declines with a vengeance this morning after one of the country’s central bank officials raised the prospect of the first rate hike under the presidency of Donald Trump as early as next month.

Patrick Harker, president of the Philadelphia Fed and a Fed voter, said “March should be considered as a potential for another 25 basis point increase” to US interest rates.

Those comments have helped the greenback surge on Tuesday following a recent bout of weakness, with the trade-weighted dollar index gaining 0.82 per cent to 100.69 – its highest level since January 30.

Mr Trump’s election has widened the gap between the path of interest rates in the US and the rest of the developed world, helping propel the dollar higher.

Mr Harker said he was “supportive” of the Fed’s plan to hike rates three times this year, insisting the central bank wants to “make sure we don’t get behind the curve” in the face of higher domestic growth and inflation.

By contrast, European Central Bank president Mario Draghi insisted yesterday that eurozone policymakers were ready to ramp up the scale and duration of their stimulus measures if inflation falls below target over a medium-term horizon.

“With only the US Federal Reserve likely to raise rates, dollar strength is likely”, said Trevor Greetham at Royal London Asset Management. “Bouts of dollar weakness can be used to add to positions in Japanese equities, which tend to do well when the yen is weak and global growth is strong.”

Sterling and the euro have weakened more than 0.8 per cent against the dollar this morning.

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