The dollar index (DXY) surged to a 1.75-month high, rising by 0.56%, following an OECD forecast that increased the 2026 US GDP estimate by 0.2% to 2.2% and lowered the inflation forecast by 0.1% to 3.6%. Expectations of continued monetary tightening by the Federal Reserve, supported by comments from Fed Governor Michael Barr, further bolstered the dollar.
In economic reports, the US S&P manufacturing PMI for September unexpectedly rose by 3.1 points to 57.0, marking the fastest pace of expansion in 4.25 years. Conversely, US mortgage applications fell 1.5% in the week ending September 18, with average 30-year fixed mortgage rates climbing to a 2.25-year high of 7.12%.
In international markets, the Eurozone’s S&P manufacturing PMI remained stable at 52.7, while the composite PMI increased to 53.1, signaling significant growth. The OECD also raised its 2026 Eurozone GDP forecast to 1.0%. As of now, there is a 69% chance of a 25 basis point Fed rate hike at the upcoming FOMC meeting on October 27-28.
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