Dollar edges back from 18-month high after FOMC minutes

The US dollar found stability as it edged back from its 18-month high following hawkish remarks from the Federal Open Market Committee (FOMC). The FOMC's minutes from September's meeting suggested policymakers viewed inflation as the primary risk to their outlook. The dollar index, which gauges its strength against six other currencies, remained steady at 102.23, having increased by 0.3 percent on Wednesday.

The greenback is currently near its strongest levels since April 9, 2025, following market volatility caused by the so-called Liberation Day tariff announcement the previous week. At the September 15-16 Federal Reserve meeting, policymakers unanimously agreed to raise interest rates by 0.25 percentage points, but the FOMC minutes revealed disagreements over the justification for this decision.

According to Westpac analysts, the minutes maintained the hawkish tone accompanying the Fed's rate hike, with most participants still favoring additional tightening and nearly all considering inflation risks to be on the upside when the meeting occurred. The FOMC does not anticipate raising rates at their upcoming meeting; currently, Fed funds futures suggest a 19% chance of a 25-basis-point hike at the Fed's subsequent two-day meeting on October 28, unchanged from the prior day.

The US dollar weakened against the yen, falling 0.2% to 157.815 yen, while the Australian and New Zealand dollars remained flat against the greenback. The Chinese yuan and euro also showed minimal movement, trading at 6.7015 yuan and 1.1201 US dollars, respectively. Meanwhile, Bitcoin experienced a 0.2% decrease to $83,233.40, and ether dropped slightly to $2,571.07.