Dollar slips from 19-month high as Fed rate path diverges from peers

The dollar slipped slightly on Thursday after hitting a 19-month high, as strong US inflation data fueled expectations of more aggressive Federal Reserve rate hikes and pushed short-dated Treasury yields sharply higher. Fed Governor Christopher Waller signaled support for a quarter-point hike in December unless core inflation exceeds 0.3 percent, while some brokerages like Goldman Sachs now expect an additional increase early next year. The dollar index reached 103.08, its highest since April 2025, before easing to 102.88. The euro fell to its lowest since May 2025 at $1.1067, pressured by expectations the European Central Bank will pause hikes after December and concerns over France's fiscal situation. The yen weakened past 159 per dollar, prompting Japan's top currency diplomat to warn against speculative moves, though wholesale inflation data strengthened bets on a Bank of Japan rate hike as soon as next month.