Update from North America

Dollar Retreats as Oil Slips

2 min read

The U.S. Dollar has retreated following a four-week winning streak that resulted in a nearly 3% gain against peers.

The pullback in the Dollar is primarily driven by falling oil prices, and subsequent lower Treasury yields. Brent Crude is trading under $105 per barrel this morning, after having risen more than 6% since Thursday, which has driven the 10-year yield down by 6 bps to roughly 5.19%. Federal Reserve Governor Christopher Waller spoke this morning and stated that the recent spike in long-term U.S. Treasury yields has helped to curb some demand in interest-rate-sensitive sectors, taking some pressure off the Fed to tighten monetary policy. Despite this, Traders are continuing to price in one additional interest rate hike before year end, although most Traders are seemingly in agreement that it will come at the Fed’s December meeting, rather than their meeting in two weeks. U.S. Consumer Price Index numbers for the month of September are due tomorrow morning, which could provide further clarity on the Fed’s intended rate path.

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JPY

The Japanese Yen is up against the Dollar after Prime Minister Sanae Takaichi and Bank of Japan Governor Kazuo Ueda appeared before Parliament early this morning. Takaichi stated that the Yen’s weakness as of late was discussed at the recent U.S.-Japan summit, signaling that U.S. and Japanese authorities are continuing to coordinate in FX markets. Many Traders have interpreted this as a warning against shorting the Yen. Ueda went on to state that inflation is near the BoJ’s 2% target, and that it is of key importance to stabilize prices around that level. This is indicatively supportive of further monetary tightening, but officials are seemingly opposed to back-to-back rate hikes. This has resulted in Traders anticipating the next hike to come in December or early 2027.

AUD

The Australian Dollar is up against the Buck this morning following the release of the Reserve Bank of Australia’s September meeting minutes. Prior to this release, there was speculation that the RBA was done with their tightening cycle after having spent the majority of 2026 as one of the world’s most hawkish central banks, but the minutes showed that the RBA may not be done tightening and left the door open for an additional hike. This was relatively hawkish and has provided some support to the Aussie amid a global risk-off attitude.