FX.co ★ Dollar Weakens as Markets Assess Fed Policy Outlook

The US dollar index slipped to around 102 on Thursday, pulling back from an 18‑month high as investors reassessed the Federal Reserve’s policy outlook in light of stronger-than-expected inflation data. Figures released Wednesday showed annual headline inflation accelerating to 3.7% in September, above the 3.6% consensus forecast, while core inflation rose to 2.6%, also topping expectations of 2.5%. Chicago Fed President Austan Goolsbee called the data “discouraging” and warned that the rapid build-out of artificial intelligence infrastructure could be contributing to an overheating economy. Even so, several policymakers signaled support for a cautious stance on additional rate hikes, and futures markets are currently pricing in roughly a 73% chance that the Fed will leave interest rates unchanged this month. Investors are now looking ahead to further comments from Fed Chair Kevin Warsh before the central bank’s communications blackout begins on Saturday.