Dollar Hits 19-Month High as Rate-Hike Bets Grow
Key Facts
The dollar hit a 19-month high against major currencies in Thursday, Nov. 12 trading, as traders increased their bets on tighter U.S. monetary policy. The dollar index rose 0.15% to 103.02, its highest level since April 2025, according to Reuters via MarketScreener. MUFG’s assessment, summarized by FXStreet, said the index reached a new year-to-date high as markets priced in a faster pace of Federal Reserve rate hikes. These moves offer a picture of market expectations for the rate path, but do not mean the central bank has decided to raise rates. The dollar’s rise comes as markets await new inflation data and comments from Federal Reserve officials.
Reuters linked the increase in tightening bets to October inflation data that came in stronger than expected and a series of hawkish comments from central bank officials. It reported that some major brokerages, including Goldman Sachs, expect a rate hike early next year as well as an increase in December. In a separate assessment, ING analysts said the dollar’s rise was supported by a hawkish tone in Federal Reserve comments and higher U.S. inflation, while short-term real-yield differentials were underpinning its momentum. ING’s summary said the index had returned to April 2025 levels. These estimates describe investor pricing and institutional analysis; the Federal Reserve sets its official position in its meetings and statements.
Bureau of Labor Statistics data showed that the Consumer Price Index for All Urban Consumers rose 0.4% month over month in October, after a 0.6% increase in September. The index excluding food and energy rose 0.3% in October, the same monthly increase recorded in August and September. The energy index rose 0.7% during the month, compared with a 5.2% increase in September, while the food index rose 0.5%. The figures mean monthly headline inflation slowed from the previous month, while the core index held its pace for three months. ING’s summary said stronger inflation supports the dollar’s upward momentum, while the core reading remains at a level monitored by monetary policymakers.
Federal Reserve Governor Christopher Waller said on Nov. 10 that he leaned toward supporting a 25-basis-point increase at the December meeting. He added that a monthly core inflation reading near 0.3% or higher could warrant considering a larger, 50-basis-point increase at that meeting. In a separate speech the same day, Vice Chair for Supervision Michelle Bowman said real GDP growth was 2.4% in the first half of the year and may have exceeded 3% in the third quarter. Bowman estimated that 12-month core personal consumption expenditures inflation may have risen to 3.3% in October. She noted that higher energy prices and demand linked to artificial intelligence had contributed to inflationary pressures.
The Federal Reserve on Oct. 28 held its target range for the federal funds rate at 3.75% to 4%, in a decision approved by 10 votes to two. The two dissenting members preferred raising the range by a quarter of a percentage point. The Federal Open Market Committee said inflation remained elevated and that accumulating more information would help it determine the appropriate policy stance to ensure inflation returned to its 2% target in a timely manner. This highlights the gap between market bets on further increases and the latest official decision, which left rates unchanged. The Bureau of Labor Statistics also reported that survey data for October 2025 were not collected because of a lapse in appropriations, preventing publication of October 2026 annual changes for some CPI series.
On the index’s moves in previous sessions, EL7 data showed the DXUSD index closing at 102.835 on Nov. 11, compared with a close of 102.15 on Nov. 10. The following day, Reuters reported that the dollar index rose to 103.02, up 0.15%, reaching its highest level since April 2025. These readings place the advance in the context of consecutive sessions of gains, alongside a repricing of rate expectations. The Bureau of Labor Statistics is scheduled to release the October Producer Price Index on Nov. 13 at 8:30 a.m. Eastern time. The Federal Reserve’s schedule that day includes a discussion by Michelle Bowman at 10:50 a.m. and a speech by Philip Jefferson at 7:00 p.m. Eastern time.