Dollar Weakens as Markets Assess Fed Policy Outlook

2026-10-15 02:38 By Jam Kaimo Samonte 1 min. read

The US dollar index slipped to around 102 on Thursday, retreating from 18-month highs as investors continued to evaluate the Federal Reserve’s monetary policy outlook following stronger-than-expected inflation data.

Figures released Wednesday showed that annual headline inflation accelerated to 3.7% in September, surpassing forecasts of 3.6%, while core inflation edged up to 2.6%, above expectations of 2.5%.

Chicago Fed's Austan Goolsbee described the figures as “discouraging” and cautioned that the rapid expansion of AI infrastructure could also be overheating the economy.

However, some policymakers continued to favor a cautious approach to further rate increases, with markets pricing in roughly a 73% probability that the Fed will keep interest rates unchanged this month.

Investors are now awaiting further remarks from Fed Chair Kevin Warsh ahead of the central bank’s media blackout, which begins on Saturday.

The dollar weakened the most against the euro, sterling and kiwi.



News Stream
Dollar Weakens as Markets Assess Fed Policy Outlook
The US dollar index slipped to around 102 on Thursday, retreating from 18-month highs as investors continued to evaluate the Federal Reserve’s monetary policy outlook following stronger-than-expected inflation data. Figures released Wednesday showed that annual headline inflation accelerated to 3.7% in September, surpassing forecasts of 3.6%, while core inflation edged up to 2.6%, above expectations of 2.5%. Chicago Fed's Austan Goolsbee described the figures as “discouraging” and cautioned that the rapid expansion of AI infrastructure could also be overheating the economy. However, some policymakers continued to favor a cautious approach to further rate increases, with markets pricing in roughly a 73% probability that the Fed will keep interest rates unchanged this month. Investors are now awaiting further remarks from Fed Chair Kevin Warsh ahead of the central bank’s media blackout, which begins on Saturday. The dollar weakened the most against the euro, sterling and kiwi.
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The dollar index hovered around 102.1 on Wednesday after retreating in the previous session, as investors cautiously awaited September’s consumer inflation data for clues on the Federal Reserve’s next interest rate decision. The greenback faced additional pressure after New York Fed President John Williams indicated that one more rate hike may be appropriate this year, while further tightening would likely be unnecessary in 2027. Meanwhile, Fed Governor Christopher Waller said inflation expectations remained “well anchored.” Further commentaries from Richmond Fed President Thomas Barkin and Fed Vice Chair for Supervision Michelle Bowman are expected later today. Markets are currently pricing in roughly a 77% probability that the Fed will leave rates unchanged this month, while assigning an 88% chance of a rate hike in December.
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