The dollar rose to a fresh two-month peak on Sept. 24, bolstered by expectations that the Federal Reserve may implement additional interest-rate increases after several policymakers signaled inflation remains a concern.
The dollar index climbed 0.14% to 101.27 after touching 101.34, marking a fourth consecutive daily advance. Against the Swiss franc, the dollar strengthened 0.4% to 0.8289, its highest level since May 2025, as the Swiss National Bank held its benchmark rate steady and dismissed Middle East–driven inflation as a threat to domestic price stability.
Treasury yields stayed at elevated levels even after easing from sharp moves the prior session. The 30-year bond yield hit its highest since June 2004, while the 10-year note reached its strongest level in nearly two decades, following data pointing to accelerating business activity and mounting price pressures.
Market expectations for another Fed hike rose to 64.2%, up from 55.4% a week ago, according to CME FedWatch. The probability of at least a 25-basis-point increase at the October meeting climbed as New York Fed President John Williams said it was reasonable to expect another rate increase before year-end, and Cleveland Fed President Beth Hammack warned that persistent inflation pressures would grow harder to tame the longer they persisted. Philadelphia Fed President Anna Paulson also flagged the possibility of additional hikes.
"We've got the two-year at the top of a post-2008 range, and we've got the 30s that are 22-year high, and the ten-year at a 19-year high," said Joseph Trevisani, senior analyst at FXStreet. "I don't think FX traders need to know too much more than that."
Labor-market data added to the dollar's strength. Weekly initial jobless claims fell by 1,000 to 197,000, below the 201,000 estimate, suggesting the employment market continued to hold steady.
Oil prices rose about 4%, contributing to inflation concerns amid little progress toward a peace deal in U.S.-Iran negotiations. Trevisani noted the Fed is looking beyond the immediate energy shock, weighing projected third-quarter economic growth.
Elsewhere, the euro slipped 0.05% to $1.1374. Norges Bank raised interest rates on Thursday, and Sweden's central bank signaled it likely will follow before year-end. The Norwegian crown strengthened 0.27% against the dollar to 9.503, while the Swedish crown weakened 0.1% to 9.92 per dollar.
The Japanese yen fell 0.3% to 158.75 against the greenback. Finance Minister Satsuki Katayama said the principles behind the coordinated Japan-U.S. currency intervention in July remain intact, though investor sentiment stayed fragile after last week's Bank of Japan rate hike failed to convince markets a faster tightening cycle is coming.
