Dollar Index breaks its June peak as the Euro sinks on dearer Crude Oil
The odds of an October Fed rate hike have roughly halved since Monday, and the Dollar Index has risen on every one of those days. It trades near 102.10, its highest since April 2025. The index is moving with Crude Oil and the Euro rather than with the odds for the Fed's next meeting.
The Dollar Index reached a six-month high on Thursday as the Euro sank against the US currency. The index soared to 102.10, its highest level since April 2025, driven by rising Crude Oil prices and an absence of urgency from Fed officials to raise interest rates further. The Fed raised rates to a 3.75-4.00% range in September, with Chair Jerome Powell citing persistent high inflation as the rationale.
New York Fed President Michelle Bowman stated there was no rush for another increase, expecting additional hikes throughout the year. However, job openings and consumer confidence both fell short of expectations, and core PCE prices rose only 0.2% in August, below forecasts. Minneapolis Fed President Neel Kashkari expressed uncertainty about an October hike, maintaining his projection of more rate hikes this year and in 2027.
Futures markets now price a 70% chance of an October hike and a less than 40% probability of one after the Consumer Price Index (CPI) release. The 10-year Treasury yield hit a 24-year high of 5.30%, while the 30-year yield stood at 5.65%. Soft job figures and a weaker-than-expected Euro contributed to the Dollar's ascent, as Europe and Japan face higher Crude Oil costs while the US exports more oil and fuel than it imports.
Nonfarm Payrolls for September are due on Friday, with expectations of 94K new jobs and a 4.1% unemployment rate, both below forecasts. A robust jobs report could reignite expectations for a rate hike in October, while a lackluster report may delay further hikes.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
