US dollar retreats from 18-month peak as Fed cools rate hike expectations
The US dollar fell 0.45% on Thursday, retreating from an 18-month peak, as investors focused on cautious Federal Reserve remarks that cooled expectations for an October interest-rate hike. Government bonds rallied and the dollar pulled back despite strong US inflation and retail sales data, with Fed officials signaling they could wait for more clarity before the October 27-28 meeting. Traders now see a 73% chance rates will stay unchanged, up from 53% a month ago. The dollar index dropped to 101.99, helping the euro bounce 0.56% and sterling gain 0.64%. Market direction remains driven by geopolitical uncertainty and concerns over AI firms' debt burdens, with investors watching Fed Chair Kevin Warsh's remarks in Bangkok on Friday.