Dollar gets lift from higher yields
UUP•The dollar held near a two-month high as rising U.S. Treasury yields supported it, while investors scaled back expectations for an October Federal Reserve rate hike after U.S. inflation rose less than expected in August.
1. Dollar supported by yields
The dollar held near a two-month high on Thursday, supported by an extended rise in U.S. Treasury yields. The dollar index stood at 101.48 after rising 2% in September, while 10- and 30-year Treasury yields hit new highs overnight.
2. Other currencies weaken
The euro was marginally lower at $1.1330 and lost nearly 2.5% in September, pressured by Europe's debt and energy concerns. Sterling was flat at $1.3264 after falling 2.1% last month. The yen slipped 0.2% to 157.82 per dollar, though it gained nearly 1.5% in September, with the threat of intervention supporting it.
3. Rate expectations shift
U.S. inflation rose less than expected in August, and July's reading was revised down, reducing expectations for a Federal Reserve rate hike this month. The Australian dollar fell to a two-month low after domestic inflation came in slightly below forecasts, while the New Zealand dollar remained near its lowest since November 2025.
