Dollar Steady at 101.14 as Yields Climb and Fed Holds the Hawkish Line

The Dollar Index sits at 101.14, up 0.02% from the prior NY close, but this is a live read taken at 04:00 Sydney — around 14:00 in New York, roughly three hours before the 17:00 close — so today's US session is still open and the figure can move before settlement. The steadiness comes despite a broad rise in longer-dated Treasury yields: the 10-year added 4.5bp to 5.300%, the 30-year 5.2bp to 5.646%, and the 5-year 3.0bp to 5.093%, while the 3-month eased 3.0bp to 4.035%. Equities were mixed — S&P 500 +0.35%, Nasdaq +0.94%, Dow -0.31% — with the VIX down 1.00% to 15.88. Gold fell 0.74% to 4151.58 and silver dropped 2.10%.

The Fed's target sits at 3.75-4.00% after a 25bp hike on September 16 (a 12-0 vote), the first hike since 2023. Most officials project at least one more hike this year — the live debate is how many further hikes, not whether cuts are coming. Today's Treasury moves fit that backdrop: the 10-year yield rose 4.5bp to 5.300%, the 30-year 5.2bp to 5.646%, the 5-year 3.0bp to 5.093%, while the 3-month slipped 3.0bp to 4.035%. On the calendar: US Unemployment Claims at 22:30 (forecast 201K vs. 197K previous), Fed speakers Barkin, Collins and Schmid at 23:05, and the US Final Manufacturing PMI at 23:45 (forecast 56.9 vs. 57.0 previous).

EUR/USD trades at 1.1336 (-0.06%), near its weakest level since May 2025 after ECB President Christine Lagarde said the bloc would take a "measured response" to this year's inflation rise, with markets leaning toward a hold at the October 29 meeting. GBP/USD is at 1.3266 (+0.26%), still inside its multi-week downtrend after the BoE held Bank Rate at 3.75% on September 17 in a 6-3 vote; Governor Bailey speaks later today. USD/JPY is flat at 157.31 (+0.02%), pinned by verbal intervention warnings from Japan's Vice Finance Minister Atsushi Mimura and a hawkish BoJ tilt. USD/CAD is at 1.4223 (+0.24%), extending an eight-session uptrend after Canadian GDP came in flat for July.

USD/JPY is essentially unchanged at 157.31 (+0.02%) on a still-open session, matching the desk's read of a pair little changed while the dollar holds broadly steady elsewhere. Japan's Vice Finance Minister Atsushi Mimura said on September 28 that markets should take "at face value" Tokyo and Washington's "very clear" concern about yen weakness, adding Japan has no funding constraint on further FX action — verbal only, with no MoF intervention spend confirmed since the Y15.4 trillion spent July 30-August 26. MUFG said that warning, plus an accelerating BoJ tightening path, is capping USD/JPY upside. The BoJ lifted its policy rate to 1.25% — a 31-year high — in a 7-2 vote on September 18, with markets leaning hawkishly toward another hike as soon as October. Japan's September Tankan survey is due at 8:50 JST today.

Ahead in Sydney-time terms: CHF CPI m/m at 16:30 (forecast 0.0% vs. 0.4% previous); Eurozone Final Manufacturing PMI at 18:00 (forecast 52.7); BoE Governor Bailey speaks at 18:00; Eurozone Unemployment Rate at 19:00 (forecast 6.4%); US Challenger Job Cuts y/y at 19:30 (previous -38.5%); US Unemployment Claims at 22:30 (forecast 201K vs. 197K previous); Fed's Barkin, Collins and Schmid speak at 23:05; ECB President Lagarde speaks at 23:30; and the US Final Manufacturing PMI at 23:45 (forecast 56.9 vs. 57.0 previous). In Japan, the BoJ's September Tankan survey is due at 8:50 JST, with large-manufacturer sentiment estimates ranging from roughly +23 to +26.