USD Slips as Fed Rate Hike Odds Eases Amid Persistent Inflation Concerns

The US Dollar (USD) is struggling amid easing Federal Reserve rate hike bets, causing the USD/CHF pair to depreciate. The pair is trading around 0.8290 during Asian hours on Friday, marking its second consecutive day of losses.

Markets are pricing in nearly a 28% chance of an October rate increase according to the CME FedWatch Tool, but this has led to a decrease in US Dollar strength. However, persistent inflation concerns from elevated energy costs and expectations of a December rate hike could potentially boost the Greenback.

Benchmark borrowing costs have seen dynamic moves, with 10- and 30-year US Treasury yields holding around 5.25% and 5.62%, respectively. This positioning is supported by expectations of further Federal Reserve tightening, underlying resilience in the US economy, and mounting concerns over the nation’s long-term fiscal and debt trajectories.