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Emirates News Agency reported that the dollar index had given back most of its post inflation data gains by the end of trading on October 15 with the currency finishing the week lower after four consecutive weekly advances. The index touched 102.95 on October 14 before reversing course as investors focused on a drop in long dated Treasury yields amid a broader shift toward safer assets. Data compiled by trading platforms placed the index near 101.99 late on October 15 reflecting a 0.6 percent daily drop at one stage. Federal Reserve officials including Vice Chair for Supervision Michelle Bowman and San Francisco Fed President Mary Daly signaled that the central bank could wait for additional evidence before considering further tightening at its October 27-28 meeting according to remarks compiled by Reuters.
The Bureau of Labor Statistics reported that headline consumer prices rose 3.7 percent year on year in September while the core measure increased 2.6 percent both exceeding economist forecasts and initially boosting rate hike probabilities to around 50 percent. Producer prices climbed at the fastest pace in four and a half years during the same month while retail sales also beat expectations on higher gasoline costs a separate government release showed. These figures reinforced views that inflation pressures are broadening beyond energy according to analysts at Monex USA.
National Australia Bank senior foreign exchange strategist Rodrigo Catril said the dollar has gone down in a hurry and we think the biggest factor has been the decline in 30 year yields. The benchmark 10 year Treasury yield fell to 5.09 percent while the 30 year touched 5.43 percent both marking three week lows as bonds rallied on risk off flows tied to concerns over artificial intelligence company debt loads. This reversal in yields removed a key support for the dollar after it had climbed on the back of elevated rate expectations earlier in the week.
The euro advanced 0.6 percent to 1.1223 against the dollar putting it on track for its strongest daily performance in nearly two months according to interbank pricing. Sterling rose 0.5 percent to 1.3250 recovering from a 13 month low while the Japanese yen also gained ground as the dollar weakened across major pairs Reuters data indicated. These moves occurred even as the greenback had hit its highest level since April 2025 only a day earlier.
Economists surveyed ahead of the releases had anticipated more moderate inflation prints yet the actual outcomes highlighted persistent price pressures across goods and services a State Street global market strategist observed. Markets continue to price in roughly 80 basis points of tightening by the end of 2027 according to CME Group fed watch tools even after the latest pullback in rate hike odds for October. The dollar index has still risen more than 3 percent year to date reflecting underlying strength tied to relative US economic performance.
Further data on the labor market and business spending will help shape expectations for the Federal Reserve path in coming months according to strategists at Brown Brothers Harriman. The central bank raised its policy rate by 25 basis points to a 3.75 4.00 percent target range in September with most officials seeing another increase likely by year end FOMC minutes released earlier showed. This backdrop has kept the dollar supported on a longer term basis despite the current weekly decline.
