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The dollar hit its highest level in more than six weeks on Wednesday morning, amid a sharp increase in bets that the US Federal Reserve will raise interest rates this month.

The dollar index hit 101.78 on Wednesday morning, its strongest level since January 12th and a 0.3 per cent rise on the day, following hawkish comments from an influential member of the Federal Reserve’s policy-setting board.

The probability that rates will rise when the Federal Reserve meets this month shot up from 50 per cent to 80 per cent yesterday after William Dudley, head of the New York Federal Reserve, said that the prospects for adding to the December 2016 rate increase had become “a lot more compelling”.

His comments helped the dollar to overcome a lacklustre reaction to President Donald Trump’s first speech to Congress last night, which outlined plans to ask for $1tn in infrastructure spending – which would be a boost to the US economy – but was lacking in detail some investors had hoped for.

Neil Mellor, a currency strategist at BNY Mellon, said: “The focus was on Trump last night and though he didn’t deliver the USD bulls anything to work with, Fed officials did. So Fed futures for a March hike have shot up – not a done deal, certainly, but I think it’s helping the market to focus its attention on the economy rather than the White House.”

The rise in the dollar sent the pound to its weakest level in more than three weeks at $1.2348. The US currency was up 0.7 per cent against the Japanese yen at Y113.5 while the euro fell 0.3 per cent to €1.0544.

The Fed meets on March 14-15.

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