Dollar Surges as Fed Hike Bets, Oil Chokepoint Risk and China Trade Uncertainty Converge
Dollar strengthened against every major currency Thursday as three drivers moved together: October Fed hike odds surged to 77.5%, from roughly 53% a day earlier and under 10% a month ago, pushing the 10-year Treasury yield to around 5.14%, its highest since 2007; Brent extended its rally above $105 as Houthi forces advanced toward the Bab el-Mandeb corridor, opening a second oil chokepoint alongside Hormuz; and the US and China extended their trade truce by only two months, to January 10, rather than locking in a more durable reset.
October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk
October Fed hike odds have surged to 69.7% on a booming flash PMI, driving the 2-year and 10-year Treasury yields to fresh multi-year highs—and pushing EUR/USD toward a structural decision zone at 1.1323–1.1353.
Dollar and Loonie Rise Together as Brent Reclaims $100 After Round Trip
Brent completed a round trip, falling into the low $98s on Tuesday as traders priced a faster Hormuz reopening, then reclaiming $100 as focus shifted from whether Iran's diplomatic offer is real to how long any agreement would take to restore actual oil flows. CAD strengthened broadly on the oil rebound, but USD/CAD still edged higher because Dollar has an additional tailwind of its own: a hawkish week of Fed commentary keeping meaningful odds on an October hike.
SNB May Do Nothing Tomorrow—So What Is Driving EUR/CHF and GBP/CHF Lower?
With an SNB hold at 0% close to fully priced, EUR/CHF and GBP/CHF are already rolling over on a different mechanism—falling oil is easing inflation pressure elsewhere, reducing the need for other central banks to widen their rate advantage over Switzerland and relieving carry pressure on the Franc.
