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The U.S. dollar held close to an 18-month high in Asian trading on Thursday, October 8, after minutes from the Federal Reserve’s September meeting reinforced concern among policymakers about persistent inflation and the possibility of further interest-rate increases. The dollar index, which tracks the currency against six major peers, was at 102.23, little changed after gaining 0.3% on Wednesday, Reuters reported.
The pullback from the index’s recent peak was limited: Reuters said it remained within a few pips of its strongest level since April 9, 2025. Investors were weighing the Fed’s hawkish message against the prospect that officials could pause at their next meeting later in October. The minutes themselves did not settle that question or commit the committee to another increase.
Minutes emphasize inflation risks
The Fed released the minutes on Wednesday, October 7, from its September 15–16 meeting. At that meeting, officials voted unanimously to raise the federal funds rate by a quarter percentage point, setting a target range of 3.75% to 4%—the central bank’s first increase in three years.
The published account described inflation as still elevated and progress toward the Fed’s 2% goal as insufficient. Participants generally saw inflation risks as tilted to the upside, citing energy costs, geopolitical developments, tariff effects and investment related to artificial-intelligence infrastructure. Some also warned that a prolonged period of above-target inflation could influence expectations and wage- and price-setting.
At the same time, the minutes recorded a relatively resilient economy. Officials described activity as expanding at a solid pace, with consumer spending and business investment supporting growth. Views on the labor market were not uniformly strong: while many saw recent improvement, some pointed to low hiring and job-finding rates and other signs of limited labor-market dynamism.
Rate outlook remains unsettled
The minutes’ inflation concerns supported the dollar by keeping the possibility of tighter U.S. monetary policy in focus. But they did not make an October hike the baseline market expectation. Reuters reported that interest-rate futures were pricing in a 19% implied probability of a quarter-point increase at the Fed’s meeting ending October 28, unchanged from the previous day.
The Associated Press reported that investors broadly expected the Fed to leave rates unchanged at its October meeting, with futures pointing instead to a possible increase in December. Those expectations are market pricing, not a decision by Fed officials. The committee’s next scheduled meeting is October 27–28, according to the Federal Reserve.
In its account of the September discussion, the Fed also noted that longer-term Treasury yields had risen and that financial conditions were still supporting economic growth, including through strong equity prices and relatively narrow corporate-bond spreads. This mattered to policymakers considering whether existing rates were restrictive enough to cool demand and inflation.
Currency moves across Asia
Trading in other major currencies was subdued early Thursday. The dollar fell 0.2% to 157.815 yen after Japanese data showed an August current-account surplus of 4.062 trillion yen, above economists’ median forecast of 3.19 trillion yen, Reuters reported. The euro was little changed at $1.1201 and sterling at $1.3215.
The Australian dollar and New Zealand dollar were also flat, at $0.6960 and $0.5600, respectively, while the U.S. dollar was steady at 6.7015 yuan in offshore trading. These moves came as traders assessed both U.S. rate expectations and country-specific economic news; the report did not attribute the individual exchange-rate changes to a single cause.
What comes next
The Federal Reserve’s rate decision remains dependent on incoming information, and the minutes reflect deliberations at the September meeting rather than a fresh policy commitment. The Fed’s stated inflation objective is 2%, while its September statement said inflation remained elevated and that the policy increase was intended to support a timelier return to that goal.
For currency markets, the near-term focus is whether subsequent inflation and economic data reinforce the case for holding rates steady or for another increase. As of Thursday’s early Asian session, the dollar remained close to its 18-month high, but futures pricing and the exchange-rate moves showed that investors had not treated a further October hike as certain.
