Dollar eases from an 18-month high as traders price a Fed pause now and 75bp of hikes later
Dollar index slid 0.25% to 102.29 on Tuesday, just under its 18-month high, as traders bet Middle East tension stays contained before the midterms. Wednesday's CPI tests a Fed priced at an 80% hold this month and 75bp of tightening by late 2027.
Reality
- Evidence62
- Adoption
- Not scored
- Hype gap+5
- Incentives
- Not scored
- Confidence65
Bullish dollar positions more than quadruple to $36 billion ahead of Wednesday's US inflation report
Bullish dollar positions rose to about $36 billion in the week to October 7 from $8.4 billion three weeks earlier, weekly US regulator data shows. Wednesday's US inflation report is the next test for a dollar trading near 18-month highs.
Reality
- Evidence62
- Adoption
- Not scored
- Hype gap+5
- Incentives
- Not scored
- Confidence60
Euro's fifth weekly slide outlasts the French bond stress that drove it to $1.1161
The euro was on course for a fifth straight weekly drop on Friday, after worry over France's record debt sent it to a 17-month low of $1.1161 on Monday. The dollar index has also risen four weeks running, so the Fed's rate path now looks like a bigger driver than French budget politics.
Reality
- Evidence58
- Adoption
- Not scored
- Hype gap+12
- Incentives
- Not scored
- Confidence55
France's borrowing premium over Germany has widened to its highest since 2012, SCMP reported, as fiscal worries build before next year's election. Handelsbanken's FX strategist says the euro's weakness now comes partly from French politics, on top of a dollar lifted by a Fed leaning hawkish.
Reality
- Evidence62
- Adoption
- Not scored
- Hype gap+5
- Incentives
- Not scored
- Confidence60
South Korea's won rose for a fifth straight session to 1,338.5 per dollar on Oct. 8 even as foreigners sold about 2 trillion won of Korean shares. Seoul Economic Daily credits exporters converting chip-export dollars, so the rally holds only as long as that selling outweighs a firmer greenback.
Reality
- Evidence70
- Adoption
- Not scored
- Hype gap+10
- Incentives
- Not scored
- Confidence65
Brent above $100 props up the dollar ahead of the Fed's September minutes
Brent's return above $100 lifted the dollar index 0.3% to 102.13 on Wednesday, even as traders cut October Fed hike odds to 21.6% from about 51%. That leaves the dollar leaning on oil prices while the September minutes test how much appetite the Fed still has for hikes.
Reality
- Evidence60
- Adoption
- Not scored
- Hype gap+10
- Incentives30
- Confidence55
France's bond spread over Bunds touched about 150 basis points on Friday, the most since 2011, and the euro fell to $1.1118 on Monday, a 17-month low. Holders of unhedged euro assets now carry French fiscal risk through the currency as well as through the bonds.
Perspective Coverage
6 publishers
- Builder
- Builder 0%
- Operator
- Operator 18%
- Investor
- Investor 82%
Reality
- Evidence66
- Adoption
- Not scored
- Hype gap+15
- Incentives
- Not scored
- Confidence62
Bitcoin gained about 6% in September as the dollar index rose nearly 2% and the 10-year Treasury yield passed 5%. Most of that gain came from a burst of ETF buying, so allocators who treat bitcoin as a bet against the dollar are really underwriting that flow.
Reality
- Evidence50
- Adoption55
- Hype gap+35
- Incentives
- Not scored
- Confidence50
A 3% oil shock cost sterling about half a cent
Houthi strikes shut Saudi Arabia's Hormuz bypass pipeline, Brent rose 3% to $108, and sterling fell 0.4% to $1.3474 on September 14. Prediction traders moved crude's record odds from 14% to 15.5%.
Reality
- Evidence28
- Adoption
- Not scored
- Hype gap+34
- Incentives62
- Confidence41
Two-to-one on a hold: the dollar's three-month low reprices every July forecast
Odds on a September Fed hold went from near coin-toss to about 67% in four weeks, and the dollar index slid to 99.5. Any plan carrying a July FX assumption is now stale.
Reality
- Evidence28
- Adoption
- Not scored
- Hype gap+22
- Incentives58
- Confidence32