Dollar Gains Ground as Energy Prices Rise and Long-Dated Bond Yields Increase

The US dollar is gaining ground in the market due to rising energy prices and long-dated bond yields. These factors are making it difficult for the Federal Reserve to completely rule out a tightening of monetary policy, which would support the dollar.

Oil and gas prices have increased following news that Washington has little interest in extending the 60-day ceasefire with Iran. This development is a positive for the dollar, as higher energy prices typically lead to stronger demand for the US currency.

The 30-year US Treasury swap spreads have not widened, suggesting that fiscal concerns are not driving the increase in long-end yields. Instead, it may be due to heavy investment-grade issuance from US hyper-scalers, which has reached a record $145 billion for August.