Dollar Index Hits 19-Month High as Markets Bet on Fed Rate Hike

On November 11, the Dollar Index rose nearly 0.7% to 102.9, its highest level since April 2025. The dollar gained 0.69% against the yen to 159.84 yen per dollar, a more than two-month high, and approached the 160-yen threshold. The euro fell 0.65% against the dollar to $1.11 per euro, while the pound fell 0.5%.

The dollar strengthened as expectations grew that the Federal Reserve would raise interest rates in December. CME’s FedWatch tool showed that interest rate futures markets assigned a 100% probability to a rate hike at the Fed’s December 8–9 meeting, including a nearly 11% probability of a 0.5-percentage-point increase. A month earlier, markets put the probability of a December hike at 70%, with the odds of a 0.5-percentage-point increase near zero.

Dollar Index performance over the past year. Original chart data source: Trading Economics.（VietVance）

Data released by the US Department of Labor on November 10 showed that the Consumer Price Index rose more than expected in October, exceeding market expectations for a third consecutive month. Core consumer prices rose 0.3% in October, above analysts’ forecast of 0.2%. Federal Reserve Governor Christopher Waller had said that, if inflation data came in high, he might support a 0.5-percentage-point rate hike in December, adding that such an increase should be considered if core inflation was around 0.3%.

After the inflation data was released, Goldman Sachs forecast Fed rate hikes in December this year and March next year; Deutsche Bank expected hikes in December this year and January and March next year. Goldman Sachs also pushed back its forecast for the start of Fed rate cuts by three months, to December 2027.

Source: VietVance