Dollar Hits 19-Month High as Traders Price 50bp Fed Hike
The dollar index hit 103.17, its highest since April 2025, as traders raised bets on a half-point December Fed hike and the yen neared 160 per dollar.
Image: Wikimedia Commons / AgnosticPreachersKid
WASHINGTON — The U.S. dollar climbed to its strongest level in 19 months on Friday, November 13, as traders raised bets that the Federal Reserve will deliver a larger-than-usual interest rate increase next month, pushing the two-year Treasury yield to a one-month high and the Japanese yen back toward the 160-per-dollar line that has put Tokyo on intervention watch.
The dollar index, which measures the greenback against a basket of major currencies, stood at 103.17, its highest since April 2025. The two-year Treasury yield peaked at 4.8920 percent, while the 10-year yield rose to a three-week high of 5.1433 percent. Traders put a 14.5 percent chance on a half-point increase at the Federal Reserve's December meeting, up from zero a week ago, according to the CME FedWatch tool.
Key Takeaways
- Dollar index 103.17, its highest since April 2025.
- Traders price a 14.5 percent chance of a 50-basis-point December hike, up from zero a week ago.
- Two-year yield up 34 basis points in two sessions, its sharpest rise in 3.5 years.
- Yen at 159.875 per dollar after briefly touching 160 on Thursday.
How a December Fed Rate Hike Would Affect Mortgage, Auto Loan and Savings Rates
A December increase is now almost fully priced in. A quarter-point move would lift the Federal Reserve's target range to 4.00 to 4.25 percent; a half-point move would take it to 4.25 to 4.50 percent.
The shift follows hotter-than-expected inflation. The U.S. Bureau of Labor Statistics reported consumer prices rose 0.4 percent in October, with core prices up 0.3 percent, both above forecasts. Federal Reserve Governor Christopher Waller said he would back a December hike and that a 50-basis-point move should be considered if core inflation stays hot. October's inflation report and Governor Waller's hawkish remarks set the stage for this week's repricing.
For households, the impact runs through borrowing costs. Mortgage rates track the 10-year yield, now 5.1433 percent. Auto loans and credit cards follow short-term rates, so a hike would push them higher within weeks, while savers earn more on deposits.
Why the Yen Near 160 Has Traders Watching for Japanese Intervention
The yen traded at 159.875 per dollar on Friday, near its lowest since early September, after briefly hitting 160 on Thursday. Finance Minister Satsuki Katayama said the government will respond appropriately to currency volatility. Top currency diplomat Atsushi Mimura warned it is too early to forget this summer's intervention.
The Federal Reserve Bank of New York said on Thursday that it bought 79.4 billion yen, about $497.37 million, on July 31 as part of a joint U.S.-Japan intervention. Many analysts expect the Bank of Japan to raise rates as soon as next month. The euro fell to $1.1049, its lowest since April 2025.
What the Strong Dollar Means for Gold, Stocks and Oil Prices
Asian shares steadied on Friday. South Korea's Kospi rose 2.35 percent and Japan's Nikkei added 1.4 percent, while Nasdaq and S&P 500 futures each rose more than 0.2 percent. Gold edged lower as higher yields made bullion less attractive. Brent crude and U.S. crude each fell more than 0.3 percent, to $95.45 and $88.39, after Thursday's jump on attacks on Saudi energy infrastructure.
| Market | Friday level | What it means |
|---|---|---|
| Dollar index | 103.17 | Highest since April 2025 |
| 2-year Treasury yield | 4.8920% | One-month high; up 34 bps in two days |
| 10-year Treasury yield | 5.1433% | Three-week high |
| USD/JPY | 159.875 | Briefly hit 160 on Thursday |
| EUR/USD | $1.1049 | Lowest since April 2025 |
| Brent crude | $95.45 | Down 0.3% on Friday |
Frequently Asked Questions
What is the chance of a 50 basis point Fed rate hike in December?
Traders put the chance at 14.5 percent, according to the CME FedWatch tool, up from zero a week ago. The Federal Reserve's next policy meeting is scheduled for December 8-9.
Why is the dollar rising against the yen and euro?
Hot October U.S. inflation, with headline prices up 0.4 percent and core prices up 0.3 percent, pushed Treasury yields higher. That lifts the dollar against the yen and euro.
Will Japan intervene if the yen crosses 160 per dollar?
Japan has not named a level. Finance Minister Satsuki Katayama said the government will respond appropriately to currency volatility.
How does a stronger dollar affect mortgage rates in the US?
A stronger dollar usually comes with higher Treasury yields, and the 10-year yield drives 30-year mortgage rates. With the 10-year yield at 5.1433 percent, home loans stay expensive.
The next test comes Friday at 8:30 a.m. Eastern, when producer price data for October is released.
