U.S. dollar touches more than three-month high

The dollar reached 101.66 against a range of currencies, its highest level since ​June 25, extending its 2% rise in September

The dollar touched a more than three-month high on Thursday, ​supported by an extended rise in US Treasury yields that has been partly driven by concerns about persistent international price pressures stemming from the US-Israeli war on Iran.

Data showing US inflation rose less than expected in August, along with downward revisions to July’s reading, reduced expectations for a central bank rate hike this month. But a surge in euro zone inflation underscored the threat ​that higher energy prices continue to pose to the economy.

Against the dollar, the euro dropped 0.11% to $1.1317 ​in Asia. It clocked a loss of around 2.5% in September, the largest since July ⁠2025, pressured by Europe’s debt and energy worries.

Sterling edged 0.1% lower to $1.32495 after having slipped 2.1% last month, similarly weighed ​down by a stronger US dollar. The dollar reached 101.66 against a range of currencies, its highest level since ​June 25, extending its 2% rise in September.

The US dollar seems to be showing more sensitivity, just at the moment, to what’s happening with say, 10-year Treasuries, than it is on pricing for when the next Fed rate hike might come, said Ray Attrill, head ​of FX strategy at National Australia Bank.

While yields are continuing to rise for the time being, I think it’s ​supportive for the dollar. If we do get an inflection point where it starts to really hurt the equity market, the dollar ‌can benefit ⁠from that, Attrill said.

World bonds suffered their largest monthly decline in years in September, pushing yields higher, due to a mix of deteriorating government finances, a glut of issuances and rising inflation.

The scaling back of expectations for a central bank hike this month prompted a slight retreat in shorter-dated US Treasury yields, but 10- and 30-year yields still hit new highs ​in the previous session. They ​hovered near those levels ⁠on Thursday.

Against the yen, the dollar was up 0.54% at 158.29 after declining 1.4% against the currency last month.

The yen has been the strongest of the G10 currencies in ​September, and the market’s reluctance to be caught out by intervention is clearly having ​an impact, said Kit Juckes, chief FX strategist at Societe Generale.