Dollar slips from 18-month high as Treasury yields fall; Fed officials temper October hike bets

LONDON, 15 October (Reuters) - The US dollar slipped from an 18-month peak on Thursday as Treasury yields fell and Federal Reserve officials sounded cautious about an October rate hike despite hotter inflation data.

Currency and bonds

• The dollar index was last down about 0.2% at 102.03, after hitting an 18-month high on Wednesday when September CPI came in stronger than expected.
• The euro bounced about 0.5% from an 18-month low to around $1.1216; sterling strengthened about 0.5% to about $1.3253.
• The 10-year Treasury yield was pushed toward 5.085% and the 30-year toward 5.428%, both near about three-week lows, Reuters reported, as safe-haven demand for bonds rose amid AI debt worries and choppy equities.

Fed messaging

• Market pricing for an October Fed hike had jumped toward about 50% after the CPI print, then eased after officials including Vice Chair for Supervision Michelle Bowman and San Francisco Fed President Mary Daly said the central bank could wait for a clearer picture ahead of the 27-28 October meeting.
• Investors also eyed comments from Fed Chair Kevin Warsh at IMF-World Bank meetings in Bangkok on Friday.

Wednesday’s CPI (3.7% year on year) initially reinforced higher-for-longer rate fears; Thursday’s moves showed markets still debating whether October action is forced, Reuters said.