Dollar Little Changed
The dollar index was little changed at 102.2 on Thursday, hovering near April 2025 highs, as the greenback remained supported by expectations that the Fed will need to keep interest rates elevated for longer. Oil prices moved higher again, adding to inflationary pressures and, in turn, reinforcing expectations of further Fed tightening. Minutes from the Fed’s September meeting showed that most policymakers expect another increase in the federal funds rate this year, although the timing remains uncertain. Fed Governor Waller said on Thursday that additional rate hikes will likely be needed to bring inflation back to target, while emphasizing that there is “flexibility” around the pace of increases. Markets currently price in an around 78% probability that the Fed will leave rates unchanged in October, while the odds of a 25bps hike in December stand at around 69%. Meanwhile, higher government bond yields in Europe continued to weigh on the euro.
2 on Thursday, hovering near April 2025 highs, as the greenback remained supported by expectations that the Fed will need to keep interest rates elevated for longer. Oil prices moved higher again, adding to inflationary pressures and, in turn, reinforcing expectations of further Fed tightening. Minutes from the Fed’s September meeting showed that most policymakers expect another increase in the federal funds rate this year, although the timing remains uncertain. Fed Governor Waller said on Thursday that additional rate hikes will likely be needed to bring inflation back to target, while emphasizing that there is “flexibility” around the pace of increases.
Markets currently price in an around 78% probability that the Fed will leave rates unchanged in October, while the odds of a 25bps hike in December stand at around 69%. Meanwhile, higher government bond yields in Europe continued to weigh on the euro.