Dollar Rallied Last Week Amidst Rate Hike Bets

(RTTNews) - The U.S. Dollar firmed up during the week ended October 30 amidst hawkish monetary policy signals from the Fed, a rise in PCE-based inflation readings, solid U.S. economic growth update, as well as persisting safe haven demand.

During the past week, the U.S. dollar inter alia rallied against the euro, the Australian dollar, the Japanese yen, and the Swiss franc. It however declined against the British pound, the Swedish krona as well as the Canadian dollar. The 6-currency Dollar Index edged up over the course of the week. Here is a quick recap of the dollar's trajectory during the week ended October 30.

During the week, the Dollar Index (DXY), a measure of the Dollar's strength against a basket of 6 currencies traded between the high of 102.49 recorded on Wednesday and the low of 101.54 touched on Friday. Currency markets digested the decision by the Fed to maintain the target range for the federal funds rate at 3.75 to 4 percent. The hawkish tone in the Federal Open Market Committee's statement and the absence of a unanimous decision to hold rates steady supported the Dollar. The FOMC's acknowledgement that inflation remained elevated and that economic activity was expanding at a strong pace, lifted the greenback.

The increase in the Fed's preferred inflation gauge also bolstered the Dollar. Data released by the U.S. Bureau of Economic Analysis on Thursday morning showed year-on-year PCE Price Index rising as expected to 3.6 percent from 3.4 percent in August. The core component thereof edged up as expected to 3.1 percent from 3 percent in the previous month. The month-on-month PCE price index rose as expected to 0.5 percent from 0.3 percent in August. The core component thereof recorded 0.3 percent, matching forecasts.

The robust GDP update from the U.S. also boosted the dollar. Data released by the U.S. Bureau of Economic Analysis on Thursday also showed the U.S. economy expanding at an annualized 3.4 percent in the third quarter of 2026, compared to a 2.2 percent rise in the second quarter and above market expectations of 3.2 percent.

However, the Fed's widely expected pause limited gains for the Dollar. The FOMC assured price stability but said it needed more information to determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal.

In the above scenario, the Dollar Index added 0.07 percent during the week ended October 30 to finish trading at 101.88. The index had closed at 101.81 a week earlier.

While the dollar firmed up mildly, a weak GDP update, the ECB's pause on rates and the situation in France dragged down the euro. During the week ended October 30, the EUR/USD pair dropped 0.38 percent to 1.1160, from 1.1203 a week earlier. The pair ranged between a weekly high of 1.1228 recorded on Monday and a weekly low of 1.1105, recorded on Thursday. Data released on Friday showed the Eurozone economy expanded by 0.4 percent in the third quarter of 2026, slowing from 0.6 percent growth in the second quarter, but exceeding market expectations of 0.2 percent.

The week ended October 30 also witnessed the British pound rallying 0.14 percent against the dollar. The sterling, which had closed at $1.3373 on October 23 increased to $1.3392 by October 30, strengthened by growing bets of a rate hike by the Bank of England next week. The GBP/USD pair traded between a low of 1.3271 touched on Wednesday and a high of 1.3436, recorded on Friday.

Despite expectations of additional tightening by the Reserve Bank of Australia next week, the Aussie edged down against the U.S. Dollar last the week. The slippage for the AUD/USD pair during the week was 0.04 percent as it moved from 0.7036 on October 23 to 0.7033 on October 30. The pair traded between the week's low of 0.7009 recorded on Tuesday and the week's high of 0.7070 recorded on Thursday.

The Japanese yen also declined 0.43 percent against the U.S. dollar during the week ended October 30, amidst a widely expected pause by the Bank of Japan. The USD/JPY pair which had closed at 156.87 on October 23, rose to 157.55 in a week's time. During the week, the pair ranged between 156.64 touched on Monday and 158.36 recorded on Wednesday even as markets digested the likelihood of another rate bike by the BoJ in December.

Sentiment in the currency market remains grim ahead of the U.S. midterm elections, the monthly U.S. jobs data release as well as lingering fears of an escalation in U.S.- Iran tensions. The six-currency Dollar Index ranged between 101.43 and 101.89 on Monday and is currently trading 0.22 percent lower at 101.66. The index had closed at 101.88 on Friday.

Market spotlight on the euro comes ahead of Wednesday's release of flash inflation readings for October from the Euro Area. Amidst the dollar's decline, the EUR/USD pair has jumped 0.44 percent on Monday to 1.1209 from 1.1160 at close on Friday.

Ahead of Bank of England's interest rate decision on Thursday, The GBP/USD pair has strengthened 0.22 percent to 1.3418 from 1.3392 at the end of the previous week. Bank of England is expected to raise rates by another quarter percent.

The AUD/USD pair which was at 0.7033 at close on Friday has slipped 0.36 percent to 0.7006 as markets wait for the outcome of Reserve Bank of Australia's decision on interest rates on Tuesday. RBA is expected to hike rates by a quarter percentage.

The USD/JPY pair has also gained 0.22 percent, rising to 157.93 from 157.55 at close on Friday while markets await the release of Bank of Japan's monetary policy meeting minutes on Wednesday.