Dollar Jumps After Hot October CPI and Hawkish Waller Remarks; Aussie Falls 1%, Yen Weakens to 158.66

The U.S. dollar strengthened against major currencies on Tuesday, Nov. 10, 2026, after hotter-than-expected October inflation data and hawkish comments from a Federal Reserve governor bolstered expectations that the central bank will raise interest rates next month.

The dollar index, which measures the greenback against a basket of six currencies, rose 0.51% to 102.20, Reuters reported. The euro was down 0.48% at $1.117, while the dollar gained 0.47% to 158.66 Japanese yen and 0.89% to 0.8251 Swiss franc. The Australian dollar fell 1% to $0.6855, and the New Zealand dollar weakened 0.59% to $0.5597.

Reversal from overnight weakness

The move reversed the dollar's softer tone earlier in the day. Overnight, the dollar index fell to a low of 101.54, well below Friday's high of 102.36 following the U.S. jobs report, as energy prices continued to decline, MUFG senior currency analyst Lee Hardman wrote in a daily note. On Monday, the index had fallen 0.47% to 101.75 and the euro had jumped 0.7% to about $1.1220, Economy Middle East reported.

The Bank of Japan's daily foreign exchange report showed the dollar at 158.01-02 yen and the euro at $1.1240-42 at 5 p.m. Tokyo time, before the U.S. data, with a dollar-yen central rate of 158.11.

CPI and Waller drive rate expectations

The Labor Department reported that the consumer price index rose 0.4% in October, above the 0.3% gain forecast in a Reuters poll. Core CPI, which excludes food and energy, rose 0.3%, also above expectations, CNBC reported. The Bureau of Labor Statistics did not publish a 12-month inflation rate because it could not collect October 2025 data during last year's government shutdown.

The yield on the two-year Treasury note, which tends to track Fed rate expectations, was up about 19 basis points at 4.738%, Reuters reported. Markets were pricing in an 89% chance of a rate hike in December, according to CME's FedWatch tool as cited by Reuters. CNBC reported the odds of a half-point increase at 13.6%, up from around zero before the report.

Ahead of the data, Fed Governor Christopher Waller said in London that he was leaning toward supporting a quarter-point increase at the Dec. 8-9 meeting and that a half-point move should be considered if inflation came in hot. Dallas Fed President Lorie Logan said after the report that she sees a need for two more quarter-point increases, according to CNBC.

"The fact that Waller was sounding so hawkish caught the market's eye. That was the beginning of the dollar's rally and the rates' rally," Steve Englander, global head of G10 FX research and North American macro strategy at Standard Chartered Bank, told Reuters. He added that the dollar "has been mostly an oil trade since the (November 3 US midterm) election," but that market focus was shifting to inflation risk and the Fed.

Oil, positioning and the euro

Lower energy prices had been weighing on the dollar in recent sessions. Hardman noted that Brent crude had fallen about 23% so far in November, its sharpest sell-off since May to June, and that the Norwegian krone had underperformed among G10 currencies during that period. He also said the most recent IMM positioning report showed leveraged funds were heavily short the euro, with short positions at their highest since early 2020, leaving the currency vulnerable to a short squeeze if concerns about the energy shock continue to fade.

The spread between 10-year French and German government bond yields had narrowed to around 145 basis points from a recent high of about 175 basis points in October, according to the MUFG note.

Yen and intervention backdrop

Japan's Ministry of Finance confirmed on Monday that authorities intervened with a total of ¥15.3993 trillion between July and September, including ¥7.9756 trillion on July 30, Economy Middle East reported, with Reuters valuing the overall operations at around $97 billion. The yen has been the best-performing G10 currency against the dollar over the past six months, helped by those operations, the report said.

What comes next

U.S. producer price data for October is due on Friday. The Fed held its benchmark rate in a range of 3.75% to 4% at its October meeting after raising it in September for the first time in three years.