Dollar Holds Near 2-Month High Amid Rate Hike Expectations

The dollar has stabilized near its strongest level in two months, as investors weigh the possibility of interest rate hikes and diplomatic efforts to end the Middle East conflict.

The euro is trading at $1.1446, close to its weakest level since late July, while sterling is at $1.3337.

Central banks have been raising rates in recent weeks, with the Federal Reserve officials hinting at further hikes if inflation doesn't ease.

Kieran Williams, head of Asia FX at Intouch Capital Markets, said 'The dollar's support from rates looks durable, but futures already price more tightening than the Fed's own projections, so the dollar now needs the data to confirm it.'

Oil prices have moderated somewhat, with Brent crude futures trading at $99.22 per barrel on hopes that diplomacy at the UN General Assembly could pave the way for a resolution to the conflict.

The Japanese yen is trading at 157.55 per US dollar as traders remain wary of the threat of intervention from the Bank of Japan.