The US Dollar Index (DXY) rose 0.69% on Wednesday to 102.90, its highest level since April 2025, after September inflation data outpaced expectations and outweighed recent Federal Reserve guidance that no rate increases would be needed in 2027. Headline CPI was 0.6% month on month, while the annual rate accelerated to 3.7% from 3.4%. Core CPI increased 0.3% on the month and lifted to 2.6% year on year from 2.4%, with higher shelter and owner-equivalent rent costs joined by gains in recreation, education, and used vehicle prices, while fuel and food supported the headline reading.
Shifts In Rate Expectations
Rate expectations adjusted quickly. The implied probability of an October hike moved from close to 22% a day earlier to 42%, and markets priced 54 basis points of tightening for 2027, according to Prime Terminal. Treasury yields climbed, with the 10-year at 5.251% up 3.5 basis points, and the 2-year at 4.865% up nearly 7 basis points. Attention now turns to the Beige Book, PPI, Retail Sales, Initial Jobless Claims and further Fed remarks, while technical measures cited DXY around 102.87, an RSI (14) of 71.85, and support levels at 102.87, 101.84 and 100.25.
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