Dollar Soars Amid Middle East Tensions and Rising Oil Prices

The US dollar continued its upward trend on Wednesday, reaching nearly a two-week high as tensions in the Middle East escalated and oil prices surged. The dollar index rose by 0.11% to 99.79, with the euro falling 0.13% to $1.1577.

Analysts point to rising Treasury yields and growing expectations of a Federal Reserve rate hike as factors driving the dollar's strength. Kumiko Ishikawa, senior FX analyst at Sony Financial Group, noted that 'continued vigilance is needed over the situation in the Middle East today.'

The New Zealand dollar weakened by 0.8% against the greenback to $0.5844, its lowest point since August 13, despite a 25-basis-point rate hike from the country's central bank.

Investors are pricing in a 68% chance of a September Fed rate hike, up from around 40% a week earlier, according to CME Group's FedWatch tool. The yield on the benchmark US 10-year note rose to 4.81%, its highest since November 2023.