Dollar Holds Firm as Oil Prices Soar Amid Middle East Conflict
The US dollar maintained its gains on Friday, trading near its highest levels of the past week. This came as oil prices surged due to conflict in the Middle East, with Brent crude up over 7% for the week after Iran-aligned Houthis seized control of Yemen's port city of Mocha and advanced down the Red Sea coast to strategic islands.
Brent crude prices fell back on Friday, however, with a drop of 4% to $104 a barrel. Despite this, energy prices remain high, pushing up bond yields and boosting bets on US rate hikes.
Currency strategist Francesco Pesole at ING said that developments in the Gulf leave the balance of risks skewed towards higher oil prices, while stress in bond markets is increasingly bleeding into risk assets, favouring a defensive rotation back into the dollar.