The US dollar took a breather toward the end of the trading week after hitting its highest level in 18 months following minutes from the Federal Reserve’s September policy meeting.
The US Dollar Index (DXY), a measure of the greenback against a weighted basket of currencies, dipped 0.09% to 102.15 from an open of 102.24, its highest level since March 2025.
The index is poised for a flat week, but it is up almost 4% year-to-date.
On Wednesday, the September summary meeting indicated that officials expect at least one more rate hike before the year ends, amid elevated inflation pressures. Officials overwhelmingly voted to pull the trigger on their first interest rate increase since July 2023.
“With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” the document stated.
Fed Governor Christopher Waller, in a speech at the Central Bank of Turkey in Istanbul on Thursday, made the case for another hike based on the economic data.
“If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal,” Waller said in prepared remarks. “But there is some flexibility about when those hikes will occur. The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time.”
Futures markets predict the next hike will take place in December instead of the initial expectation of September.
Meanwhile, global bond markets have been a major factor in international currency markets. Yields on government bonds have rocketed since August, with US Treasury securities taking center stage.
Like the dollar, Treasury bonds took a breather following strong investment demand during back-to-back auctions. The ten- and 30-year yields sank to 5.23% and 5.6% on Thursday.
The USD/CAD currency pair tumbled 0.18% to 1.4234, from an opening of 1.4258. The EUR/USD rose was little changed at 1.1203.