Dollar Holds Firm Near 99.92 as Fed's Hawkish Hike Lingers

The Dollar Index sits at 99.9160, down just 0.03% in a session that is still open — the reading reflects trading around 14:00 New York time, roughly three hours before the 17:00 close, so it is not a final print. The index is essentially flat, but that comes after the Federal Reserve's September 16 decision to raise its target range 25bp to 3.75-4.00%, its first hike since 2023, with 16 of 18 officials projecting another increase this year. That guidance has kept the dollar underpinned against several majors this week, even as today's DXY move itself is muted. Equities were mixed in the incomplete session: the S&P 500 added 0.33% and the Nasdaq 0.39%, while the Dow slipped 0.08% and the VIX fell 4.08% to 14.81.

US yields moved higher across the curve in today's incomplete session: the 10-year added 5.1bp to 4.998%, the 5-year rose 5.5bp to 4.856%, the 30-year gained 3.5bp to 5.331%, and the 3-month edged up 1.3bp to 3.978%. These are same-day moves, separate from the larger policy step already delivered by the Fed's September 16 decision to lift the target range 25bp to 3.75-4.00% in a 12-0 vote, citing elevated inflation and economic activity expanding at a solid pace. Headlines note 16 of 18 officials see a further hike this year, and that Trump publicly called for a cut and later hit out at the Fed's call. The policy conversation in the data here remains centered on further hikes, not cuts.

EUR/USD trades at 1.1486 (+0.09%), still near its weakest levels since late July after French bond stress — the OAT-Bund spread widened to about 95bp — and ECB President Christine Lagarde's Dublin remark that further hikes "will depend on the future" and that a cut looks very unlikely for now. GBP/USD is at 1.3393 (+0.26%), also near its weakest since late July after the Bank of England held Bank Rate at 3.75% in a 6-3 vote on September 17, a day after the Fed's September 16 hike widened the UK-US rate gap. USD/JPY is at 156.87 (+0.58%); the yen has weakened even after the Bank of Japan's 25bp hike to 1.25%, its highest since 1995, as Governor Ueda's guidance read less hawkish than expected. USD/CAD sits at 1.3983 (-0.05%), holding near multi-week highs.

USD/CAD is essentially flat today at 1.3983 (-0.05%) in the still-open session, but that steadiness sits atop a multi-week high reached after the Fed's September 16 hike to 3.75-4.00% widened the gap against the Bank of Canada's unchanged 2.25% overnight rate, held September 2 with the next decision due October 28. StatCan's August CPI held at 3.0% y/y, with gasoline still up 22.8% y/y. The bigger mover in the CAD complex today is oil: WTI is down 6.42% to $95.48 and Brent down 5.28% to $99.29, extending a slide that was already running into Friday's close (WTI -1.6% to $100.30 that session). Desk sentiment on the pair has been bullish USD/CAD, with the widened rate gap and easing oil both cited as CAD-negative. Canada's calendar is light into next week, with StatCan retail trade for July due September 24.

Today's calendar shows no scheduled events (the data source flagged possible delay). Into the next session, Monday September 21: Chicago Fed President Austan Goolsbee speaks at 5:30am ET, followed by the Chicago Fed National Activity Index at 7:30am ET. Japan's markets are shut for the Respect for the Aged Day holiday, part of a five-day Silver Week running through September 23. No major UK, eurozone/German, or Canadian data are due Monday. Later in the week, flash S&P Global/CIPS UK PMIs and HCOB/S&P Global flash PMIs for Germany and the euro area are expected around September 23. Canada's next print is StatCan retail trade for July, due September 24, and the next Bank of Canada decision is October 28.