Dollar Surges as Fed Hikes Odds, PMIs Fuel Growth Binge

The US dollar has broken higher as the Federal Reserve signals a hawkish tone, while PMIs in North America surge above those in the Eurozone. This shift in momentum is critical for the dollar's continued rise, with the prospect of back-to-back hikes in October now at 70% according to market bets.

Fed speakers have been voicing their concerns about inflation being off track, and the need for policy recalibration. The latest PMI figures show a significant increase in growth, driven by AI-driven services and investment-driven manufacturing. This is in contrast to the Eurozone, where despite some good news from the September composite PMI, the US still maintains its lead.

The European Central Bank meetings saw Norges hike interest rates by 25bps, while the Riksbank kept rates steady but signaled a hawkish hold and two future hikes. The SNB remains dovish, keeping rates at an extreme low of 0%, with CHF being pressured as a result.