A look at the day ahead in US and global markets from Mike Dolan. After almost a month on the back foot, the US dollar is on the rise again and shaping up for its best week since March. A darkening inflation picture in Europe, China’s economic stumble and falling interest rates, and Federal Reserve hawkishness ahead of its annual Jackson Hole symposium next week are all conspiring to lift the greenback again. Up 15pc over the past year, the dollar’s index hit a its highest since mid-July on Friday, with China’s offshore yuan sliding to a 3-month low ahead of expected official interest rate cuts there on Monday. Chinese easing contrasts with Fed soundings. St. Louis Fed President James Bullard on Thursday said he’s leaning to another 75-basis point (bp) hike next month and would like to get the 2.25-2.5pc Fed rates up to 4pc by year-end. “I don’t really see why you want to drag out interest rate increases into next year.” After impressive weekly job readings and surprising optimism in the Philadelphia Fed’s manufacturing gauge for August, the economy appears stronger than many in markets have suspected. Market pricing edged back overnight toward a bigger Fed hike, with about a 50/50 chance of 75 bp or 50 bp moves next month now assumed – even as San Francisco Fed chief Mary Daly warned it was important to “ensure that we don’t overdo policy.” Ten-year US Treasury yields climbed on Friday to their highest since July 21 and US stock futures fell by almost 1pc, along with similar losses in Europe. Whatever the merits of the ‘peak inflation’ narrative stateside, there’s little sign yet of that overseas. After Britain’s 10pc inflation shock earlier in the week, the euro zone price picture darkened on Friday too. German producer prices soared by 37.2pc in the year through July, their biggest increase on record both year-on-year and month-on-month as energy costs skyrocket due to the Ukraine war. Even Japan recorded its fastest consumer price inflation in more than seven years as price pressures broadened beyond food and energy. There was some marginal relief in energy prices on Friday. Oil prices slipped back after two days of gains and crude headed for weekly losses as a strong dollar and worries about a global economic slowdown weigh.