Dollar Holds Firm as October Fed Hike Odds Fall to 48%

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Summary · why it matters

The U.S. Dollar Index is trading at 101.37, holding above support at 101.33, as dovish remarks from New York Fed President Williams cut the odds of a 25 basis point rate hike in October from 71% to 48%. Williams said he saw no urgency after the September Fed rate hike and signaled a more gradual approach to future increases. Attention now turns to the September core PCE price index report due today and a two-day run of U.S. labor market data culminating in Friday's Nonfarm payrolls report. Elevated U.S. inflation and frequent issuance of U.S. Treasuries have pushed the 10-year U.S. Treasury note yield above 3.6%, supporting the greenback, while the euro heads for its worst monthly performance against the dollar in over a year as energy costs tied to the conflict in Iran and rising geopolitical tensions push French bond yields 115 basis points above their German counterparts. Sterling is trading at 1.3238, capped below 1.3250, with support at 1.3205, as Bank of England data showed unsecured consumer lending picked up in August, complicating the Bank's inflation fight. On the technical side, a break above 101.61 would shift the Dollar Index's focus to 101.83 and 102.03, while a close below 101.08 would turn the trend down; the euro faces resistance at 1.1353 and support at 1.1311, and the pound faces resistance at 1.3250 with support at 1.3205.

Impact on assets 4

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％Effective Federal Funds Rate
EFFR
▼ NegativeMonetaryrelevance

Dovish Williams remarks cut October hike odds to 48%, signaling a more gradual path and lower expected policy rate.

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💱Euro/US Dollar FX Spot Rate
EURUSD
▼ NegativeMonetaryrelevance

Euro heads for worst month vs dollar as energy costs and Iran-linked geopolitical tensions widen French-German yield spreads.

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