Dollar Near 18-Month Peak Despite Fed Rate Hike Uncertainty
The dollar index maintained its strength near 102 on Monday, remaining close to its 18-month peak last seen in April 2025. This resilience persisted despite traders reducing their bets on a near-term interest rate hike by the Federal Reserve, following disappointing US jobs data.
The greenback's gains were also supported by the euro's weakness, driven by rising fiscal debt and persistent political gridlock in France. Meanwhile, US employment figures released on Friday revealed a far weaker-than-expected job market, with only 29,000 positions added in September compared to forecasts of 90,000.
The August jobs report was also revised downward to 133,000, while the unemployment rate increased to 4.2%. Annual wage growth slowed to 3.0%, marking its lowest rate since May 2021. These developments led markets to price in an 80% probability that the Fed will hold off on rate hikes this month, with December hike expectations holding at 69%.