Dollar Rises as Middle East Tensions Boost Oil Prices
The dollar maintained its strength near a two-week high, buoyed by rising oil prices and inflation concerns. The U.S. launched airstrikes on Iran, prompting Iranian retaliation, which drove oil prices higher. Brent futures rose 1.15% to $95.74 a barrel, while WTI crude increased 0.85% to $91.05.
Markets raised their bets for a Federal Reserve rate hike, with the CME Group's FedWatch tool indicating a 68% chance of a September hike. This is up from around 40% a week earlier. The yield on the benchmark U.S. 10-year note rose to 4.81%, its highest since November 2023.
The Japanese yen weakened against the dollar, falling below the psychologically important 160-per-dollar threshold despite expectations of a Bank of Japan rate hike this month. BOJ Governor Kazuo Ueda said he hoped to discuss with his board whether the economy is moving in line with their forecast and whether inflation risks are heightening.