The dollar’s climb to a seven-month high has Goldman Sachs Asset Management concerned further appreciation could undermine the U.S. economy and deter the Federal Reserve from raising interest rates in December.

The Fed may hold fire if the trade-weighted measure of the greenback climbs to levels last seen in January, the asset manager said in a note to clients Oct. 28. The gauge is at its highest level since March 1. While Goldman said it still expects tightening in December, it has increased its bullish bets on the Mexican peso, Malaysian ringgit and Indian rupee that benefit from higher commodity prices and “decent global growth.”

“The Fed has expressed concerns about the dollar strength given the impact on financial conditions,” Goldman Asset wrote in the note. “Tight financial conditions contributed to the Fed’s decision to delay its first rate hike and we believe that similar concerns may arise if the dollar appreciates back to its January levels.”

The Bloomberg Dollar Spot Index, which measures the U.S. currency’s performance against a basket of 10 major counterparts, advanced 0.1 percent as of 6:33 a.m. in London from Friday when it retreated 0.3 percent after touching a seven-month high. The index has risen 2.2 percent in October, poised for its biggest monthly gain since May. The yen, which is set for its worst month since May, slipped 0.1 percent to 104.84 per dollar.

The Bloomberg U.S. Financial Conditions Index, which tracks the overall level of financial stress in the U.S. money, bond, and equity markets, has had negative readings since late July and was at minus 0.38 Monday. A negative value indicates tighter financial conditions.

Fed Outlook

The market’s implied probability of a rate increase by the Fed in December fell to 69 percent as of Friday, its lowest level in a week. The odds of a move at the central bank’s policy meeting this week are 17 percent.

Still, the resilience shown by of other asset classes such as equities and oil despite the dollar’s strength over the last couple months may encourage policy makers to tighten, according to Vassili Serebriakov, a foreign-exchange strategist at Credit Agricole CIB in New York.