Dollar Index Hits 9-week Low

The US Dollar Index slipped to 102.1 on Wednesday after the Federal Reserve kept interest rates unchanged as expected, while subtle changes in its policy statement were interpreted as signs of a slightly more dovish stance. The FOMC voted 10–2 to maintain the federal funds rate within the 3.75%–4% range, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting and favoring a 25-basis-point increase. However, policymakers offered no clear indication of whether rates could rise again in December, emphasizing that incoming data would guide future decisions and help bring inflation back to the 2% target. During the post-meeting press conference, Fed Chair Kevin Warsh also announced that the FOMC would continue to hold eight meetings annually but plans to reduce the number of policy rate decisions to seven in 2027 and six in 2028. The announcement comes less than a week before the November midterm elections, amid widespread public dissatisfaction with the economy.

The US dollar index held around 102.4 on Wednesday after advancing for three consecutive sessions, supported by investor caution ahead of the Federal Reserve’s upcoming policy decision. The central bank is widely expected to keep interest rates unchanged, although traders will look for clues about the possibility of a rate hike in December. On the corporate front, Alphabet and Microsoft are set to release earnings after the market closes on Wednesday, with investors assessing their results for insights into AI-related demand, which has contributed to US economic growth. Meanwhile, the dollar gained more than 1% against the kiwi after the Reserve Bank of New Zealand unexpectedly kept its cash rate unchanged, defying expectations for a 25-basis-point increase. Investors will also monitor upcoming monetary policy decisions in Canada, the Euro Area, and Japan.

The dollar index strengthened to 102.2 on Tuesday, extending gains for a third consecutive session and reaching its highest level in about two weeks. Investors brace for a busy week of monetary policy decisions from major central banks, with the FOMC meeting kicking off today. The Federal Reserve is widely expected to leave the fed funds rate unchanged, although investors will look for clues on whether a rate hike in December remains a possibility. The European Central Bank, Bank of Japan and Bank of Canada are also due to announce their policy decisions this week. The greenback also drew support from improved stability in equity markets, as sentiment surrounding AI-related stocks steadied following last week’s volatility. Meanwhile, the dollar traded mostly higher against the euro, which remained under pressure from France’s deteriorating fiscal outlook and mounting concerns in the bond market.