Dollar Index hits two-week high on Fed speak, trade war tensions

The dollar index, which tracks the value of the greenback against the basket of major currencies, is currently trading at 97.39, having clocked a high of 97.50 yesterday - a level last seen on Nov. 13.

The greenback picked up a bid after Fed's Vice Chair Clarida backed gradual rate hikes and warned that moving too slow could prove costly.

Further, Trump's comments that it was "highly unlikely" he would accept China's request to hold off a planned increase in tariffs also put a bid under the greenback.

The focus now shifts to a speech by Fed Chairman Jerome Powell later on Wednesday and the minutes from the Fed’s Nov. 7-8 meeting on Thursday.

Both the treasury yields and US dollar will likely see a sharp rise if Powell says that monetary policy would have to turn restrictive (above-neutral rates) for some time.

The yields, however, would collapse, driving the US dollar lower across the board, if the central bank chief puts more emphasis on risks to US economy from the housing market and the global economic slowdown and waning impact of fiscal stimulus.