Dollar Eases Off Recent Highs as Yen Jumps and Loonie Holds Near 1.4140

The US Dollar Index sits at 100.73, down 0.22%, though this session is still open (the quote reflects roughly 14:00 New York, about three hours before the close). That follows Friday's session, when the index touched its highest level since late July before pausing, letting the euro claw back some ground intraday. Treasury yields were mixed and modest: the 10-year added 2.2bp to 5.184%, the 30-year rose 4.3bp to 5.504%, the 5-year eased 1.8bp to 5.007%, and the 3-month was flat at 4.070%. Equities firmed, with the S&P 500 up 0.61%, the Dow up 1.00%, and the VIX down 5.11% to 14.87 — a calmer tape than the yield moves alone would suggest.

The policy backdrop remains a hiking one: the Fed lifted its target range 25bp to 3.75-4.00% on September 16, its first hike since 2023, on a 12-0 vote, and most officials project at least one more hike this year. The live question for markets is whether further hikes follow, not whether cuts are coming. Today's yield moves were small — 10-year yields up 2.2bp, 30-year up 4.3bp, 5-year down 1.8bp, 3-month barely changed — consistent with a market holding its hawkish Fed view rather than repricing it sharply. FOMC member Bowman is scheduled to speak today at 22:15.

EUR/USD trades at 1.1391 (+0.10%), consolidating after eurozone flash Composite PMI improved to 53.1 in September from 52.0, with ECB President Lagarde due to speak today at 23:30. GBP/USD is at 1.3245 (+0.20%), building on Friday's bounce that coincided with BoE Governor Bailey's hawkish energy-price comments; BoE's Ramsden speaks today. USD/JPY has dropped to 157.27 (-1.00%), extending yen strength after Friday's jawboning and the BoJ's hike to 1.25%. USD/CAD is essentially flat at 1.4139 (+0.01%), holding just above the 1.4100 level it broke above Friday.

USD/CAD is nearly unchanged today at 1.4139 (+0.01%), sitting just above the 1.4100 level it broke through on Friday, extending a third consecutive weekly loonie decline. The underlying driver is a widening Fed-BoC policy gap: the Fed hiked 25bp to 3.75-4.00% on September 16 citing still-elevated inflation, while the Bank of Canada held at 2.25% on September 2 for a seventh straight decision. Friday's session also saw WTI crude drop roughly 3% on reports of US-Iran talks over reopening the Strait of Hormuz, though that de-escalation narrative stalled over the weekend after reports President Trump rejected Iran's proposal, so it isn't a confirmed live driver into today. Oil remains lower today (WTI -2.44%, Brent -8.59%). No major Canadian data is due today; GDP by industry follows Tuesday.

20:00 — GBP: MPC Member Ramsden speaks (low importance). 22:15 — USD: FOMC Member Bowman speaks (low importance). 23:30 — EUR: ECB President Lagarde speaks (medium importance). No other scheduled releases fall within today's window; additional Fed speakers and Canadian/eurozone data are slated later in the week.