The US Dollar rallies to a 19-month high as hawkish Fed repricing drives a 62% probability of 50bps in rate hikes, pressuring Gold below $4,000 and pushing EUR/USD to its lowest point since May 2025.
Hot inflation data and hawkish Fed comments have pushed the Dollar Index to its highest level since April 2025, above 103.00, with the dollar up 0.59% to 1.72% against majors this week. Markets now price a nearly 62% chance of 50bps of Fed hikes over two meetings versus only 10% a week ago. Incoming jobless claims and Fed commentary could extend the move, though MUFG cautions a 50bps hike is not the base case.
EUR/USD trades at its weakest level since May 2025 below 1.1100 as hawkish Fed repricing drives dollar strength; the euro is down 0.59% against the dollar this week. With no euro-specific catalysts mentioned, the pair's direction hinges on the Fed's rate path, which currently favours further euro downside.
USD/JPY holds near 160.00, its highest level since early September, after rising nearly 0.7% on Wednesday. The hawkish Fed repricing lifts the dollar while BoJ board member Toichiro Asada cautioned against rate hikes given weak consumption, leaving the policy gap in the dollar's favour.
Hawkish Fed repricing continues to weigh heavily on gold, which has lost more than 2.5% since the beginning of the week and trades at a new weekly low around $3,960, dropping below the $4,000 mark. Rising rate-hike expectations make non-yielding gold less attractive, favouring further downside in the near term.
GBP/USD trades at its lowest level in nearly a month at around 1.3250, down more than 1% over a two-day slide, despite upbeat UK data: Q3 GDP grew 1.9% annually, matching expectations, with industrial and manufacturing production beating estimates in September. The dollar's hawkish-Fed rally is overwhelming the domestic improvements.
The 10-year US Treasury yield holds steady at around 5% after rising for three consecutive days, as hawkish Fed repricing supports higher yields. With no further CPI prints before the FOMC meeting, the yield may consolidate, though the payrolls report remains a swing factor.
The US Dollar Index climbed to its highest level since April 2025, trading above 103.00 as markets price in a 62% chance of 50bps in Fed rate hikes. Gold dropped below $4,000 to $3,960, while EUR/USD fell to its weakest level since May 2025.
Hot inflation data and hawkish Fed comments have lifted rate-hike expectations, with markets pricing a nearly 62% chance of 50bps of Fed hikes in the next two meetings, up from 10% a week ago, pushing the index above 103.00 for the first time since April 2025.
The pair trades below 1.1100, its weakest level since May 2025, driven by the dollar's rally on hawkish Fed rate expectations.
Markets have sharply repriced Fed hikes to a nearly 62% chance of 50bps over two meetings, while BoJ official Asada warned rate hikes could push down underlying inflation as consumption lacks momentum, keeping the yen under pressure.
Hawkish Fed repricing after hot inflation data has lifted rate-hike expectations, pushing the dollar to a 19-month high and driving gold down more than 2.5% this week to around $3,960, below $4,000.
No. UK Q3 GDP grew 1.9% annually and September production data beat estimates, but the pair still fell to around 1.3250, its lowest in nearly a month, mainly because of the dollar's rally on hawkish Fed expectations.
It holds steady at around 5% after rising for three consecutive days, supported by hawkish Fed rate expectations.