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FX Week Ahead: DXY hits 13wk high as Fed hawks push back
The United States dollar index surged to its strongest level in over three months last week as traders pared back expectations for further Federal Reserve rate cuts. Hawkish remarks from several Fed officials reinforced the view that inflation remains too high to justify further easing, driving the U.S. Dollar Index (DXY) up 0.8% to its highest since July. The DXY was buoyed by Federal Reserve Chair Jerome Powell’s measured tone following the central bank’s widely expected quarter-point rate cut to a range of 3.75% - 4.00%. Powell cautioned that the policy outlook remains uncertain and warned markets not to assume another cut in December. At the same time, Treasury yields climbed to multi-week highs as investors adjusted to the Fed’s more cautious stance. The central bank also announced small-scale Treasury purchases to ease recent liquidity strains, signalling that financial conditions had tightened more than policymakers anticipated. Among Fed officials, Kansas City’s Jeffrey Schmid and Dallas Fed President Lorie Logan both voted against the latest rate cut, citing persistent inflation and resilient labour markets. Cleveland Fed President Beth Hammack echoed similar concerns, while Atlanta’s Raphael Bostic stru
Currencies
FX Week Ahead: DXY ticks down amid tame US inflation
The United States dollar index (DXY) began the week on a softer note, slipping 0.1% in early Asian trade after the long-awaited September CPI report came in below expectations, reinforcing confidence that the Federal Reserve will deliver a 25-basis-point rate cut at its meeting this week. Although the U.S. dollar index still managed a 0.3% weekly gain. Headline inflation rose 0.3% month-on-month and 3% annually, slightly below forecasts, while core inflation eased modestly, offering the Fed breathing space as it balances tariff-driven price pressures with the need to support employment. With policymakers expected to follow through with two more rate cuts in October and December, attention now turns to whether the central bank interprets the tariff-related uptick in inflation as temporary or persistent heading into 2026.Euro steady despite mixed crosswindsEUR/USD hovered around 1.1629, following weekly declines of 0.21%, as muted U.S. inflation data failed to alter market expectations of a near-term Fed cut. The euro remained supported by upbeat Eurozone PMI figures, though momentum was capped after Moody’s revised France’s outlook to negative, citing political instability and fiscal risks. Meanwhile, S&P Global PMIs
Currencies
FX Week Ahead: DXY steady, trade tensions in focus
The United States dollar index (DXY) started the week steady at 98.536 after closing out last week with a marginal 0.3% decline, as traders reacted to easing trade tensions between Washington and Beijing and weighed signals of further monetary easing from the Federal Reserve. Markets were rattled early in the week when President Donald Trump reaffirmed that the United States was already “in a trade war” with China, intensifying uncertainty. Tensions escalated further after Treasury Secretary Scott Bessent referred to China’s trade negotiator as an “unhinged wolf”, exacerbating diplomatic friction. However, sentiment improved later in the week as Trump softened his stance, saying high tariffs on Chinese goods were “not sustainable” and confirming plans to meet President Xi Jinping at the upcoming APEC Summit in South Korea. On the monetary front, several Fed policymakers - including Christopher Waller, Stephen Miran, and Alberto Musalem - endorsed further easing, reinforcing expectations of two additional rate cuts before year-end. Markets now fully price in a 25-basis-point cut in October, with a smaller probability of a larger move.Euro dips as dollar steadiesThe EUR/USD currency pair started the week slightly high
Currencies
FX Week Ahead: DXY at multiweek highs; Yen slides
The United States dollar index started the week near multi-month highs, despite weakening at the end of last week as renewed trade tensions between Washington and Beijing rattled markets and pushed investors towards safe-haven assets. U.S. President Donald Trump’s threat of a “massive increase” in tariffs on Chinese imports triggered a sharp risk-off move across equities, bonds, and currencies, setting the tone for a volatile start to the week. The DXY fell below 99.00, erasing part of its weekly gain as traders priced in the possibility that trade and political uncertainty could force the Federal Reserve into additional rate cuts before year-end. Trump’s comments on Truth Social described Beijing’s rare earth export restrictions as “hostile” and accused China of using the minerals to hold the world “captive”. He also said he saw no reason to meet President Xi Jinping at the APEC summit in South Korea. Beijing’s new rules require foreign companies to obtain special licences to export any product containing more than 0.1% of rare earth content, heightening fears of supply chain disruptions in sectors such as semiconductors, electric vehicles, and defence manufacturing. The renewed confrontation between the world’s tw
Currencies
FX Week Ahead: Fed cut bets, shutdown weighs on DXY
The United States dollar index (DXY) traded slightly higher around 98.05 during Monday’s Asian session but remained capped as investors weighed the impact of prolonged government shutdown uncertainty and growing expectations of additional Federal Reserve rate cuts. The U.S. government shutdown entered its fifth day after lawmakers failed to reach an agreement to reopen federal operations. President Donald Trump warned his administration would begin laying off federal workers if Congress did not pass funding legislation soon. The standoff has delayed the release of major economic data, including the September employment report, leaving traders reliant on secondary indicators for policy guidance. According to the CME FedWatch Tool, markets are now pricing in a 94.1% probability of a 25-basis-point rate cut in October, with an 83.9% chance of another in December. Fed Governor Stephen Miran backed an aggressive easing stance, citing the administration’s fiscal policies as a drag on growth, while Dallas Fed President Lorie Logan struck a hawkish tone, cautioning against cutting too quickly given persistent inflation in non-housing services. The FOMC’s September meeting minutes due Wednesday will be a key event, with t

Currencies
FX Week Ahead: Dollar holds gains, traders eye NFP
The United States dollar index began the week little changed after booking a second consecutive week of gains. The U.S. dollar index (DXY) opened little changed at 98.182, following gains of 0.6% last week, with traders now turning their attention to September’s nonfarm payrolls (NFP) report for the next catalyst. The Greenback’s momentum was reinforced by stronger-than-expected U.S. fundamentals, with revised second-quarter gross domestic product (GDP) data coming in higher than expected, while labour market indicators pointed to resilience, helping the DXY break through the 98.00 mark and briefly touch monthly highs near 98.60. U.S. Treasury yields mirrored the move, adding to the bullish tone. The Federal Reserve recently delivered a 25 basis-point rate cut, citing cooling job growth and mounting employment risks. Projections suggest another half-point of easing is likely before year-end, while the 2026–2027 path shows smaller cuts ahead. Chair Jerome Powell highlighted slowing hiring, cautious consumer spending, and core inflation at 2.9%, adding that risks appear more balanced and the Fed is nearing a neutral stance. Markets are pricing in two more cuts - October and December - totalling nearly 40 basis p
Currencies
FX Week Ahead: US dollar pushes higher post Fed cut
The U.S. dollar started the week broadly steady after a volatile stretch that saw the greenback hit multi-year lows before rebounding on the Federal Reserve’s decision to lower interest rates for the first time since December. The dollar index (DXY) opened at 97.657, little changed after finishing last week 0.03% higher. The rebound that began after Wednesday’s Fed meeting carried through to Friday, with the central bank lowering its benchmark rate by 25 basis points to a range of 4.00% to 4.25%. More than the rate cut itself, markets are now focused on what lies ahead as Fed officials begin a busy schedule of public remarks. The “blackout” period before the September policy meeting ended on Thursday, opening the door to a new phase of monetary communication. Over a dozen speeches are expected this week, including three appearances from Governor Michelle Bowman, comments from Raphael Bostic, Lorie Logan and Austan Goolsbee, and above all, Chair Jerome Powell, whose remarks on Tuesday (Wednesday AEST) will be closely scrutinised. The Fed’s latest projections underscored divisions within the committee. Nine policymakers see two more cuts this year, six prefer holding steady, while new Governor Stephen Miran - who d
Currencies
FX Week Ahead: DXY nears 7wk lows; Fed cut priced in
The United States dollar index (DXY) began the week on firmer ground, ticking up 0.1% to 97.615 after touching seven-week lows last week at 97.253. Despite the uptick, the broader bearish trend remains intact as markets brace for a widely expected Federal Reserve interest rate cut later in the week. Last week’s data showed consumer inflation picking up slightly, while jobless claims posted the largest increase in four years. The deterioration reinforced expectations that the Fed will cut rates by 25 basis points (bp) at its meeting this week, with another reduction likely before year-end. The CME Group FedWatch Tool is currently indicating a 96.4% chance of a 25bp cut, with a 3.6% chance of a larger 50bp cut. The Fed convenes amid unusual political pressure. President Donald Trump has nominated a new candidate for the central bank’s Board of Governors while also attempting to dismiss Governor Lisa Cook, an unprecedented move that has raised concerns over Fed independence and global market confidence.Euro steadies near four-year highsThe euro slipped 0.1% to 1.1728 at the start of the week but remained close to four-year highs. The EUR/USD currency pair gained 0.18% last week as markets fully priced a Fed cut.
Currencies
FX Week Ahead: DXY rebounds after NFP weakness
The United States dollar index (DXY) began the new week at 97.904 after touching multi-week lows of 97.43 during Friday's session, pressured by a combination of soft data and falling Treasury yields. Nonfarm payrolls showed the economy added just 22,000 jobs in August, far short of the 75,000 expected. The unemployment rate rose to 4.3%, while June’s figures were revised to show a net job loss. Federal Reserve officials sent mixed signals. New York Fed President John Williams noted rates may fall eventually, but said more evidence is needed. Richmond’s Tom Barkin also spoke of modest adjustments ahead. CME Group FedWatch Tool data now shows an 8% chance of a larger half-point September cut, while implied rates suggest 70 bps of easing by year-end and more than 150 bps by the end of 2026.Euro climbs on stronger GDP, weaker dollarThe EUR/USD currency pair rose to 1.1759 last week as dollar weakness accelerated after the jobs data miss. Eurozone GDP for the second quarter was revised upward on an annual basis, offering additional support. Traders now turn to next week’s U.S. consumer price index report to gauge whether disinflation continues. A softer print could cement the case for a September rate cut and susta