Dollar hits two-month peak as Fed hike bets rise on yields, labor data
The dollar index climbed 0.15% to 101.28 on Thursday, reaching its highest level since July 29, as Treasury yields surged and Federal Reserve officials reinforced expectations of further rate hikes amid persistent…
Source: Reuters on MSN · Reuters on MSN · September 24, 2026 at 11:02 PM · AI-assisted report
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NEW YORK, 25 SEPTEMBER 2026 —
The dollar index climbed 0.15% to 101.28 on Thursday, reaching its highest level since July 29, as Treasury yields surged and Federal Reserve officials reinforced expectations of further rate hikes amid persistent inflation and a tightening labor market.
Market Impact
The greenback’s rally accelerated after the 10-year Treasury yield hit its highest point in nearly two decades and the 30-year yield reached its peak since June 2004, according to data from Channel NewsAsia. The move followed hawkish comments from Fed officials, including New York Fed President John Williams and Philadelphia Fed President Anna Paulson, who both signaled that additional rate increases may be necessary if inflation remains elevated.
Underpinning the dollar’s strength was a mix of economic data and geopolitical risks. Weekly initial jobless claims fell to 197,000—below the 201,000 estimate—indicating a steady labor market, while oil prices jumped nearly 4% after a Houthi missile strike on Saudi Arabia revived supply disruption fears. Gains later eased as reports emerged of U.S.-Iran discussions on reopening the Strait of Hormuz.
Since the Fed’s last 25-basis-point hike to a 3.75%-4.00% range, multiple officials have warned of further tightening if inflation does not ease. Joseph Trevisani, senior analyst at FXStreet, noted that yields—with the two-year note near post-2008 highs and the 30-year yield at a 22-year peak—already reflected a shift in market expectations. "The Fed knows this is a supply shock for oil, but they’re focused on third-quarter growth projections," he said.
For Malaysian markets, a stronger dollar could pressure exporters and importers, particularly those dealing in commodities or goods priced in U.S. dollars, while raising borrowing costs for foreign-currency debt holders. The ringgit has already weakened this year, and further Fed tightening may limit Bank Negara Malaysia’s ability to cut rates in response to domestic economic cooling.
The dollar index’s advance to 101.39—its highest since July 29—marked a fourth straight daily gain, reflecting how quickly sentiment has shifted. With inflation data due later this week, traders will watch closely for any further signals from Fed officials or economic releases that could extend the dollar’s rally.