US Dollar Index Reaches 18-Month High, Impact on Bitcoin and Stocks

The US Dollar Index (DXY) hit an 18-month high near 102.56, while Bitcoin struggled around 83000 and the Nasdaq declined. The dollar's rise is driven by expectations of another interest rate hike by the Federal Reserve this year, making dollar-based investments more appealing and potentially diverting funds from riskier assets. Bitcoin has dropped nearly 3% in the past week, with Ethereum experiencing larger losses. The S&P 500 and Nasdaq also fell on Monday, influenced by rising oil prices. The 10-year Treasury yield reached 5.35% on October 8, its highest in 24 years, as investors moved 166 billion into money-market funds. The Fed's current benchmark rate is 3.75%–4%, with futures indicating an 87% chance of another hike by December. Cleveland Fed President Beth Hammack warned that persistent inflation could become harder to manage. The upcoming CPI report is expected to show annual inflation rising to 3.7% from 3.4%, with core prices forecast to increase by 0.2% monthly. Higher-than-expected inflation may further strengthen the dollar, increasing selling pressure on Bitcoin and stocks, while softer inflation could ease rate hike expectations.

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