The dollar index rose for a fourth straight session, opening Q4 on solid ground and trading above 101.8, its highest level since April 2025. This move builds on a 2% gain in September, as the greenback continues to be supported by expectations of further Federal Reserve tightening amid persistent inflationary pressures linked to geopolitical tensions in the Middle East and resilient US economic data.
Hawkish remarks from several Fed officials further bolstered expectations of additional rate increases. Minneapolis Fed President Neel Kashkari noted on Wednesday that price pressures remain elevated, even though PCE inflation—the Fed’s preferred inflation gauge—came in below forecasts. Markets have now fully priced in another 25 bps rate hike this year and nearly four additional hikes by the end of next year.
Even so, the implied probability of a hike at the October meeting has eased to about 37%, down from roughly 70% a week earlier. The dollar traded mostly higher against the yen, the pound, and the euro.
