Market News

By Laura Matthews and Stefano Rebaudo

October 16, 2026 | Reuters

Summary

Dollar set for its first weekly loss in more than a month against the euro and yen.

Investors scale back expectations for a Federal Reserve rate hike despite hotter inflation data.

A selloff in AI-related stocks and concerns about data-centre operators’ debt add pressure to the dollar.

Article summary

The U.S. dollar weakened on Friday and was on track for its first weekly decline in more than a month against the euro and the Japanese yen. Markets were reassessing the likelihood of another Federal Reserve rate increase, while concerns linked to a selloff in artificial-intelligence shares weighed on sentiment.

Hotter-than-expected consumer and producer price readings initially unsettled markets. However, comments from Federal Reserve officials suggesting there was no urgency to tighten policy further helped stabilise Treasury yields and reduced support for the dollar.

AI-related shares fell sharply during the week, with concerns spreading into parts of the credit market. Investors questioned whether data-centre operators would become profitable quickly enough to service their debts. The dollar index fell 0.42% to 101.61 and was set for a 0.6% weekly decline.

Sterling rose 0.60% to $1.3353 and was up 0.92% for the week. The Swiss franc also strengthened, supported by safe-haven demand. Markets assigned an 85% probability to the Fed leaving rates unchanged later in October.

The euro rose 0.33% to $1.1255, putting it on track for a 0.48% weekly gain, although French fiscal risks remained in focus. The dollar slipped 0.12% against the yen to 157.79, leaving the yen on course for a 0.33% weekly rise. Bank of Japan Governor Kazuo Ueda reiterated the risk that underlying inflation could overshoot the central bank’s 2% target.