On Tuesday, the dollar index saw a turnaround, climbing to about 106.7 and approaching its highest point in a year. The US dollar is poised to finish October with a modest 0.5% increase. This is due to the anticipation that the Federal Reserve will maintain high interest rates, reflecting the US economy’s robustness compared to other leading economies.
US Employment Costs on the Rise
Recent statistics indicate that employment expenses in the US have surged unexpectedly in the third quarter, largely because of increased wages. This suggests that the job market remains competitive and tight.
Anticipation Around Fed’s Next Move
The Federal Open Market Committee (FOMC) begins its two-day meeting today, with a strong consensus among traders—97% probability—that interest rates will remain on hold. However, the focus is on any forward-looking statements from the Fed regarding its future monetary policy.
The yen notably weakened against the dollar, dropping over 1.5% and crossing the 151 threshold. This drop came after the Bank of Japan’s policy update failed to meet market expectations for a more significant policy shift. The dollar also gained ground against the Australian dollar and the Euro.