Dollar Scales Three-Month Peak on Yields Boost

The US dollar has reached its highest level in over three months, reaching $101.66 against a basket of currencies. This comes after data showed that US inflation rose less than expected in August, reducing expectations for a Federal Reserve rate hike this month.

However, the surge in euro zone inflation underscored the threat that higher energy prices continue to pose to the global economy. The dollar's strength has been driven by an extended rise in US Treasury yields, partly due to concerns about persistent global price pressures stemming from the US-Israeli war on Iran.

Ray Attrill, head of FX strategy at National Australia Bank, said that 'the US dollar seems to be showing more sensitivity, just at the moment, to what's happening with say, 10-year Treasuries, than it is on pricing for when the next Fed rate hike might come.'