Dollar set for big rise in September, mainly at euro's expense
SPY•The dollar gained nearly 2.3% against the euro in September and was on track for its biggest monthly advance against the single currency in 14 months, supported by stronger U.S. growth and rising interest-rate expectations.
1. Dollar gains
The dollar hovered near its highest level of the year against the euro and was on track for a third consecutive quarterly advance. Traders had priced in a more aggressive path for U.S. monetary policy than for the euro zone, where growth was weaker and debt concerns were mounting.
2. Rate expectations shift
Some expectations for a more hawkish Federal Reserve eased after New York Fed President John Williams said there was “no need for urgency” in raising rates. Traders cut the probability of a 25-basis-point Fed rate increase next month to about 44%, from around 70% earlier in the week.
3. Data in focus
The euro edged up to $1.135 but remained near the May 2025 low reached in the previous session. Investors awaited German September inflation figures and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, for August; sterling rose after revised data showed stronger U.K. second-quarter growth.
