Key Highlights

  • The Federal Reserve's broad dollar index was 121.4048 on October 16, up 2.2% from August 28 (calculated).
  • That is 0.3% above the 121.0834 reading on October 16, 2025 (calculated).
  • The euro traded at $1.1231 versus $1.1665 a year earlier, and the yen at 158.00 per dollar versus 150.75.
  • The index of emerging-market currencies was 129.98, below 131.97 a year earlier.
  • Spotify said currency added about 190 basis points to third-quarter revenue growth.

Dollar Strength: Is the Dollar Actually Stronger Than a Year Ago?

The answer depends on the currency. The Federal Reserve's broad dollar index, which weights the dollar against major trading partners, was 121.4048 on October 16, up 2.2% from 118.7479 on August 28 but only 0.3% above its level a year earlier (calculated).

Underneath that flat year-on-year reading, the dollar is much stronger against advanced economies. The index for advanced-economy currencies was 114.6677 versus 112.1887 a year earlier, a 2.2% rise, while the emerging-market index slipped from 131.9654 to 129.9838.

Against single currencies, the euro traded at $1.1231 versus $1.1665 a year ago, so the dollar is 3.9% higher, and the yen at 158.00 per dollar versus 150.75, 4.8% higher (calculated). The pound traded at $1.3330 on October 16. The Canadian dollar traded at 1.4157 per US dollar and the Mexican peso at 18.5026.

Third-Quarter Results: Where Does the Currency Effect Show Up?

Company disclosures show how mix drives the effect. Spotify (NYSE:SPOT), which reports in euros, said revenue of €4.969 billion rose 16%, or 14% in constant currency, with currency adding about 190 basis points, or €81 million of revenue and €19 million of operating income. It guided currency to add about 230 basis points in the fourth quarter.

Deckers Outdoor (NYSE:DECK) reported net sales up 3.5% to $1.481 billion, or 2.8% in constant currency. Procter & Gamble (NYSE:PG) built a currency headwind of about $50 million into its fiscal 2027 outlook, small against core EPS guidance of $6.89 to $7.11.

Gentherm (NASDAQ:THRM) cited currency, mainly the Mexican peso, among the pressures on a gross margin of 23.3% versus 24.6%. The pattern is consistent with a dollar that is firm against Europe and Japan but not uniformly against emerging markets.

Dollar and Rates: What Is Driving the Currency?

Rates are the main support. The Federal Reserve raised its target range to 3.75% to 4.00% on September 17, and futures priced roughly a 94% chance of another increase in December as of October 20. A widely followed dollar index rose more than 2% in June to near 101.2, and fell to a three-week low on Thursday, October 22, according to dealer commentary.

The 10-year Treasury yield fell to 4.96% that day from 5.13%. A dollar tied to rate expectations can soften quickly when yields retreat, which is why currency guidance for the fourth quarter carries real uncertainty.

What to Watch Next: Will the Fed Meeting Move the Currency Effect?

The Federal Open Market Committee meeting on October 27 to 28 is the next catalyst, with the yen near 158 per dollar a level to monitor. As more companies report, constant-currency growth versus reported growth will show how much of the dollar's move has reached earnings. Currency commentary in company outlooks is the detail to watch.