Dollar holds near 18-month high as markets wait for Wednesday's US inflation report
The dollar index hovered around 102 on Monday, close to last week's 18-month peak, as Middle East tensions and Wednesday's CPI data dominate a week in which traders see an 81% chance the Fed holds rates in October.
The US dollar stayed close to its strongest level in a year and a half in Asian trading on Monday, 12 October, Reuters reported, as investors weighed an escalating Middle East conflict and waited for key US inflation figures.
The numbers
- The dollar index was slightly lower at 102.14, not far from the 18-month peak reached last week. Trading was thin because Japanese markets were closed for a holiday.
- Brent crude fell 1% to $103.55 a barrel after swinging between gains and losses. Prices were pushed by Houthi strikes on Saudi Arabia and attacks on two tankers, and pulled by President Donald Trump’s announcement of an “energy ceasefire” between Russia and Ukraine.
- The euro edged up to about $1.121 after five straight weekly losses, weighed down by worries about France’s public finances ahead of the 2027 presidential election.
Why CPI matters
Wednesday’s consumer price index is one of the last major releases before the Federal Reserve’s late-October meeting. The Fed raised rates in September for the first time since 2023. According to the CME FedWatch tool, traders now price an 81% chance that the Fed will keep rates unchanged this month, up from 51% a month ago.
Barclays analysts said the dollar’s rally may pause: sharp bond sell-offs have tightened financial conditions, which could lead Fed officials to sound more reassuring, especially if inflation comes in soft.
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