DXY Steadies Near 99.9 as Treasury Yields Climb Following Fed's Hike

The US Dollar Index sits at 99.9160, down 0.03%, on a still-open session — the live leg is roughly 14:00 in New York, about three hours before the 17:00 close, so this reading isn't the close itself. The index is holding a narrow range following last week's Federal Reserve decision, which lifted the federal funds rate to 3.75%-4.00% on September 16, the first hike since July 2023, alongside a hawkish dot plot signalling a further move later this year. Broader risk appetite looks calmer than that headline suggests: the VIX fell 4.08% to 14.81, the S&P 500 added 0.33% and the Nasdaq gained 0.39%, even as the Dow slipped 0.08%.

Treasury yields firmed across the curve on the day: the 10-year rose 5.1bp to 4.998%, the 5-year rose 5.5bp to 4.856%, the 30-year added 3.5bp to 5.331%, and the 3-month bill ticked up 1.3bp to 3.978%. These are modest daily moves layered on top of last week's larger policy repricing, driven by the Fed's September 16 hike to 3.75%-4.00% and a hawkish dot plot signalling a further move later this year. The 20+ Year Treasury ETF fell 0.67% to 81.19, consistent with the back-up in long-dated yields. On today's calendar, Chicago Fed President Austan Goolsbee is due to speak, alongside release of the Chicago Fed National Activity Index.

EUR/USD trades at 1.1486, up 0.09%, a modest bounce that stays inside last week's range after the pair closed Friday near its weakest level since late July. GBP/USD is at 1.3393, up 0.26%, holding part of the lift from Friday's stronger UK retail sales even as an oil-driven inflation worry capped the move. USD/JPY trades at 156.87, up 0.58%, building on Friday's push to two-week highs after the Bank of Japan's split 7-2 vote to hike left the yen offered on Governor Ueda's less-hawkish tone. USD/CAD is little changed at 1.3983, down 0.05%, consolidating after a mid-week advance took the pair to a one-month high last week.

EUR/USD is today's rotation to watch: at 1.1486, it's up a modest 0.09%, sitting well inside the past week's range — a September 12 high of 1.1599 down to a September 17 low of 1.1458 — after closing Friday near its weakest level since late July. The slide began ahead of the Fed's September 16 decision, which raised the funds rate to 3.75%-4.00% with a hawkish dot plot, widening the gap against the ECB's own September 10 hike to a 2.50% deposit rate. No major eurozone data is due today. ECB President Lagarde and Executive Board member Cipollone are scheduled to speak at an ECB roundtable in Frankfurt, though that lands in tomorrow's session by the Sydney clock; flash eurozone PMIs, due Wednesday, are the next scheduled catalyst.

Today's calendar is light: at 20:00, the German Buba monthly report is due (low impact, no forecast given); at 20:30, Chicago Fed President Austan Goolsbee speaks, alongside release of the Chicago Fed National Activity Index. Further ahead by the Sydney clock, Tuesday's early hours bring ECB President Lagarde, Bank of Canada Governor Macklem, RBA Assistant Governor Hunter, a Japan bank holiday, and RBA Governor Bullock (flagged high impact) — none of that is today's business. Later this week, flash eurozone, UK and US PMIs are due Wednesday, September 23, and Japan's flash PMIs follow on Thursday, September 24.