Dollar steadies at 101.75 as traders await CPI and an 85 percent chance of a December Fed hike
The dollar steadied in Asian trading on Tuesday after a 0.47 percent slide a day earlier, with foreign-exchange traders reluctant to press bearish bets before U.S. inflation data that could lock in another Federal Reserve rate increase.
The dollar index stood at 101.75 after Monday's fall, when lower oil prices and a rebound in global equities pushed investors back toward risk assets. The euro held near $1.1220 after jumping 0.7 percent overnight, recovering much of Friday's loss, when a stronger-than-expected U.S. payrolls report lifted Treasury yields and the dollar. Sterling traded around $1.3441, supported by the Bank of England's first rate rise in three years last week, an 8-1 vote that took Bank Rate to 4 percent. The yen held near 157.97 per dollar, with Japan's Ministry of Finance confirming ¥15.3993 trillion of intervention between July and September, including ¥7.9756 trillion on July 30 alone.
Tuesday's October Consumer Price Index, due at 8:30 a.m. Eastern Time from the Bureau of Labor Statistics, is the immediate focus. Economists surveyed expect headline prices to rise 0.3 percent month on month after September's 0.6 percent, with core inflation forecast at 0.2 percent. Markets already assign roughly an 85 percent probability to a December Fed hike, and the central bank left its benchmark range unchanged at 3.75 percent to 4 percent at its October meeting. The release is unusual: the BLS will not publish standard year-over-year comparisons for October because last year's federal government shutdown prevented collection of the October 2025 data needed for a comparable base.
The move toward higher U.S. rates accelerated after Friday's employment report, which showed nonfarm payrolls up 165,000 in October, more than double the 65,000 economists expected, with unemployment down to 4.1 percent from 4.2 percent and combined upward revisions of 84,000 for August and September. Markets now price roughly two U.S. rate hikes by mid-2027. Macquarie strategists Thierry Wizman and Gareth Berry said political changes after the midterm elections could slow investment in artificial intelligence, adding: "This could be a factor that slows US growth in 2027 and helps put a top in for the dollar." A hotter CPI could lift Treasury yields and rebuild long-dollar positions; a softer one could extend the euro's recovery. The Producer Price Index on Friday, November 13 follows.
