Dollar Firms as Middle East Tensions Drive Oil Prices Higher
The US dollar firmed up on Wednesday, reaching its highest level in two weeks, as tensions in the Middle East drove oil prices higher and raised concerns about inflation.
The dollar index rose 0.11% to 99.79, with the euro down 0.13% at $1.1577.
The renewed hostilities between the US and Iran led to a surge in oil prices, with Brent futures up 1.15% at $95.74 a barrel and WTI crude 0.85% firmer at $91.05.
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 market's expectations of a Federal Reserve rate hike also contributed to the dollar's strength, with money markets pricing in a 68% chance of a September Fed hike, up from around 40% a week earlier.