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Dollar surges as Fed hike bets jump, yields hit 2007 high

Fed tightening expectations rose sharply, with October hike odds at 77.5%, while 10-year Treasury yields reached about 5.14% for the highest level since 2007.

Reported · Written up by our desk · Major Pairs

The dollar strengthened against every major currency on Thursday as market pricing rapidly shifted toward additional Fed tightening, with October hike odds jumping to 77.5% from roughly 53% a day earlier and below 10% a month ago, according to Action Forex.

That repricing pushed the 10-year Treasury yield to around 5.14%, the highest level since 2007, while the 2-year approached 4.90% and the 30-year rose above 5.44%. The outlet also pointed to New York Fed President John Williams saying it is “reasonable” to expect another rate hike before year-end, with timing dependent on incoming data.

Alongside rates, oil supply risk and trade uncertainty moved at the same time. Brent extended its rally above $105 as Houthi forces advanced toward the Bab el-Mandeb corridor, creating a second oil chokepoint risk, while the US and China extended their trade truce by two months to January 10 instead of agreeing to a longer reset.

Action Forex described Thursday as a rare convergence day because these drivers, previously counterbalanced by factors like hopes for diplomacy or longer trade relief, aligned in the dollar’s favor, with the FX heat map showing broad dollar gains across the board.

Latest closeBrent $97.67 ▼1.6%

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