Dollar Stands Firm as Middle East Tensions Escalate Oil Prices
The dollar has maintained its strength in the face of renewed hostilities in the Middle East. The recent escalation, which saw the US launch airstrikes on Iran and prompt Iranian retaliation, pushed oil prices higher by nearly 1%. Brent futures rose to $95.52 a barrel, while WTI crude increased to $91.02.
The dollar's safe-haven appeal has been reinforced by rising Treasury yields and expectations of a Federal Reserve rate hike. Despite recent economic data coming in below forecasts, the market is pricing in a 67% chance of a September Fed hike, up from around 40% a week earlier, according to CME Group's FedWatch tool.
Kumiko Ishikawa, a senior FX analyst at Sony Financial Group, warned that 'continued vigilance is needed over the situation in the Middle East today.' The Japanese yen was little changed against the greenback at 160.21 per dollar, remaining beyond the psychologically important 160-per-dollar level.