TOKYO, October 07, 2026 (DAILYNWZ) — The U.S. dollar recovered some of its recent losses on Wednesday as investors awaited minutes from the Federal Reserve’s September meeting and speeches by several policymakers for clues on the timing of further interest rate increases.
The dollar index, which tracks the greenback against a basket of major currencies, rose 0.16% to 102.07, after falling 0.27% on Tuesday. The euro slipped 0.25% to $1.123, while the yen weakened 0.19% to 158.39 per dollar and sterling lost 0.21% to $1.3244.
The Fed is due to release minutes from its September policy meeting later Wednesday, when it raised interest rates to contain inflation. Recent comments from policymakers have sounded less hawkish after weaker-than-expected U.S. personal consumption expenditure and employment data last week.
“There seems to be a little bit less urgency on the Fed to hike rates after the softer PCE and then the nonfarm payroll reports recently,” said Gavin Friend, a senior markets strategist at National Australia Bank.
Expectations for an October rate increase have fallen sharply. Markets now see a 20.5% probability of a hike of at least 25 basis points this month, down from about 51% a week ago, according to CME FedWatch. The probability of a December increase, however, stands at 84.5%.
Kansas City Fed President Jeff Schmid struck a more hawkish tone on Tuesday, saying the central bank still needs to raise rates further to bring inflation down, even as higher long-term borrowing costs weigh on some areas of economic activity.
Fed officials Christopher Waller, Neel Kashkari and Alberto Musalem are scheduled to speak later Wednesday. The central bank is also due to release consumer credit data, with economists expecting August credit growth to slow to $15 billion from $18.06 billion in July.
The dollar also drew support from demand for safer assets after Iran-aligned Houthi forces attacked Aden International Airport in Yemen. U.S. Vice President JD Vance told Reuters that Iran must make a “meaningful” reduction in its nuclear enrichment capacity to end the eight-month war, which has disrupted energy markets and added to inflation pressures.
In Asia, the yen weakened despite dovish Bank of Japan policymaker Ayano Sato saying in an interview with Kyodo that she supports raising interest rates in several stages. Three people familiar with the BOJ’s thinking said the central bank could signal this month that underlying inflation has broadly reached its 2% target, underscoring its readiness to raise rates again.
Global bond yields have risen in recent weeks on expectations of further rate increases and concerns over government finances. French debt remains under pressure as politicians struggle to reduce the budget deficit ahead of the 2027 presidential election, while a snap election call in Spain has added to strains on the euro.
The Australian dollar fell 0.14% to $0.6972 and the New Zealand dollar dropped 0.28% to $0.5605.
In cryptocurrencies, bitcoin fell 1.76% to $84,115.47, while ether dropped 3.3% to $2,609.57.