Archive · 24 Sep 2026
Dollar Nears Two-Month High as Fed Hike Bets Rise
The U.S. dollar became more valuable against other major currencies.
Investors think the Federal Reserve may raise interest rates again in October.
Higher interest rates can make a country’s currency more attractive to investors.
Several Fed officials said more increases might be needed to reduce inflation.
New data showed that U.S. business activity grew strongly in September.
However, stronger demand also caused supply problems and higher prices.
Oil prices rose after Iranian officials said important conditions for negotiations had not been met.
The euro and Japanese yen both lost value against the dollar.
The dollar index rose 0.51% to 101.06, its highest level since July 29.
Markets placed roughly 70% odds on at least a 25-basis-point October Fed hike, up from 53%.
Fed officials, including Michael Barr, signaled that further rate increases may be needed if inflation persists.
The U.S. Composite PMI climbed to 58.4 from 56.0, supported by stronger new orders but accompanied by supply and price pressures.
Oil prices rose after Iranian officials questioned progress toward negotiations, while the euro and yen weakened against the dollar.
- Who
- The U.S. dollar, investors, Federal Reserve officials, Iranian officials, and traders in major currencies were involved.
- What
- The dollar rose to its highest level in nearly two months as expectations for another Federal Reserve rate hike increased.
- When
- Wednesday, September 23.
- Where
- In global financial markets; the dollar index reached its highest level since July 29.
- Why
- Investors responded to hawkish Federal Reserve comments, persistent inflation concerns, strong U.S. business activity, and rising oil prices linked to Middle East tensions.
Further Tightening Advocates
Caution About Further Tightening
Federal Reserve policy
Further Tightening Advocates
Michael Barr and other Federal Reserve officials indicated that additional rate increases may be necessary if inflation remains elevated.
Caution About Further Tightening
Austan Goolsbee said the central bank should be careful and consider whether the energy shock could create persistent inflation rather than fade on its own.
Market interpretation
Further Tightening Advocates
Investors viewed the Fed’s recent rate increase, official comments, and strong U.S. activity data as reasons to expect another hike in October.
Caution About Further Tightening
The article notes that higher energy costs and strained supply chains could complicate policy decisions and increase economic risks.
- Dollar index
- Rose 0.51% to 101.06, after reaching 101.23.
- October Fed hike odds
- About 70%, up from roughly 53% before the U.S. data release.
- Previous Fed hike
- The Federal Reserve raised rates by 25 basis points to a 3.75%-4.00% range the previous week.
- U.S. Composite PMI
- Rose to 58.4 from 56.0, its highest reading since July 2021.
- Euro
- Fell 0.51% to $1.1389.
- Japanese yen
- Weakened 0.52% to 158.19 per dollar.
- Offshore Chinese yuan
- The dollar strengthened 0.17% to 6.71 yuan.