Dollar Index Eases to 100.73 as Fed's Hike Path Keeps CAD Under Pressure

The US Dollar Index sits at 100.73, down 0.22% in a session still open (this is a live snapshot, not a close). Treasury yields were mixed: the 10-year added 2.2bp to 5.184% and the 30-year rose 4.3bp to 5.504%, while the 5-year eased 1.8bp to 5.007% and the 3-month barely moved, up 0.2bp to 4.070%. Equities firmed - the S&P 500 gained 0.61%, the Dow 1.00%, the Nasdaq 0.48% - and the VIX dropped 5.11% to 14.87, a calmer tape than the 'bond market bloodbath' headlines running elsewhere this week. Gold added 0.28% to $4,285.77 as the dollar eased.

The dollar's backdrop still traces to the Federal Reserve's September 16 decision to raise the federal funds rate 25bp to 3.75%-4.00%, its first hike since 2023. Fed Chair Kevin Warsh, whose latest remarks headlines framed as delivering 'a fresh, clear perspective,' has kept the market weighing whether more increases are on the way, with reports that the Fed hinted further hikes may be coming, and today's headline flow continues to press that question. On the day, the 10-year added 2.2bp to 5.184% and the 30-year rose 4.3bp to 5.504%, while the 5-year eased 1.8bp to 5.007% - a mixed reaction across tenors rather than a uniform move - with the 3-month barely shifting, up 0.2bp to 4.070%.

EUR/USD trades at 1.1391 (+0.10%), still hovering near its weakest level in almost two months on the Fed's hike path even as the dollar eases modestly today. GBP/USD is at 1.3245 (+0.20%), edging higher but still pinned near a three-month low after hawkish Bank of England commentary from Governor Bailey and Deputy Governors Breeden and Lombardelli on energy-driven inflation risk. USD/JPY sits at 157.27 (-1.00%), the yen the day's standout mover against a broadly easing dollar. USD/CAD is at 1.4139 (+0.01%), holding just above the 1.4100 level it broke through in Friday's completed session.

USD/CAD sits at 1.4139, little changed in today's still-open session (+0.01%), holding just above the 1.4100 level it broke through in Friday's completed session, when the pair extended its climb for the week. That move reflected two forces: a pullback in oil - WTI down 2.44% to $92.43, Brent off 8.59% to $97.44 - on reports the US and Iran are weighing a phased deal to reopen the Strait of Hormuz, removing a geopolitical premium that had supported the loonie; and a widening Fed-BoC policy gap, with the Fed's September 16 hike to 3.75%-4.00% contrasting the Bank of Canada's September 2 hold at 2.25%, its seventh straight hold. BoC Governor Tiff Macklem has said policy 'cannot offset the effects of tariffs or influence global energy prices.' Next up: StatCan's July GDP Tuesday and the September Manufacturing PMI Thursday.

Today's economic calendar returned no listed events for euro-area, UK or Canadian releases (data-source note: calendar feed limited today). Looking to the week ahead per desk trackers: Monday, Sept 28 has no major euro-area, UK or Canadian data, though Bank of England policymaker speeches continue following this week's remarks from Bailey, Breeden and Lombardelli. German retail sales and preliminary CPI are due Wednesday, Sept 30, ahead of euro-area flash HICP inflation Friday, Oct 2. For Canada, StatCan's July GDP lands Tuesday, Sept 29 at 8:30am ET (consensus flat m/m), followed by the S&P Global Canada Manufacturing PMI for September on Thursday, Oct 1 at 9:30am ET.