17/09/2026 – Daily Reports
Hawkish Fed Lifts Dollar as Focus Shifts to BOJ
- The U.S. dollar climbed to a seven-week high, with the Dollar Index rising to 100.33 after the Fed delivered a hawkish message.
- The Fed raised rates and signaled another rate hike in 2026, while new Fed Chair Kevin Warsh sounded more hawkish than expected.
- U.S. Treasury yields moved higher as markets repriced the Fed’s policy path. Fed funds futures now imply around a 90% probability of another 25-bp hike by year-end.
- The euro slipped to $1.1456, near a seven-week low, while GBP/USD remained around $1.3377 ahead of the BOE decision.
- USD/JPY rose to around 156.20, with the yen near a two-week low as markets await the BOJ rate decision on Friday.
- The BOJ is expected to raise rates to a 31-year high, making Governor Ueda’s guidance on the pace of further tightening crucial for the yen.
- Rising oil prices and persistent inflation pressures are keeping major central banks focused on inflation risks and the possibility of higher-for-longer rates.
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- The Fed raised rates by 25bp yesterday to 3.75%–4.00%, marking its first rate hike since 2023. Policymakers also signalled that at least one more hike could come in 2026. Chair Kevin Warsh’s comments were viewed as hawkish, supporting the U.S. dollar.
- The dollar and Treasury yields moved higher following the decision. The dollar index reached a seven-week high, while markets are pricing roughly a 90% probability of another Fed hike by year-end.
- Gold initially fell after the Fed decision but rebounded today to around $4,295. The fact that the hawkish message was largely priced in, together with technical buying, has provided some support, although higher rates remain a headwind.
- Oil has lost some momentum after its recent rally. Supply risks related to the Strait of Hormuz and the Middle East remain, while elevated oil prices continue to create an inflation risk for the Fed.
