The dollar strengthened against major currencies on Wednesday, influenced by U.S. October inflation data and hawkish comments from Federal Reserve officials. The dollar index rose 0.63% to 102.85, its highest level since April 2025.
The dollar rose 0.69% against the yen to 159.83, a more than two-month high; the euro fell 0.61% against the dollar to $1.11, its lowest level since May 2025; and the dollar rose 0.86% against the Swiss franc, its highest level since mid-October.
Goldman Sachs has revised its forecast to include Fed rate hikes in December and March of next year, while Deutsche Bank expects consecutive rate hikes in December, January, and March. Rising interest rate expectations and safe-haven demand stemming from a potential US-Israel conflict with Iran are providing support for the US dollar.
AI Interpretation: Inflation data demonstrated unexpected stubbornness, shattering market illusions of a near-term shift to looser monetary policy. The hawkish stance of Federal Reserve officials, coupled with the sticky inflation, resonated with market pricing in declining interest rates, completely reversing the downward trend in interest rates. The strong rise in the US dollar index reflects capital's renewed affirmation of a prolonged high-interest-rate environment. This trend has forced a repricing of global assets, with risk aversion and interest rate differentials jointly constructing a strong protective barrier for the US dollar.
