Dollar Soars as US-Iran Tensions Push Oil Prices Higher
The US dollar continued its upward trend on Monday, reaching a two-month high as tensions between the US and Iran pushed up oil prices. The dollar index, which measures the value of the US currency against a basket of peers, rose to 101.15, putting it on track for a 1.7% gain in September, its best month since June.
Oil prices climbed more than 1% on Monday, with Brent crude futures trading above $106 a barrel after President Donald Trump rejected a peace deal with Iran to resolve their conflict and reopen the Strait of Hormuz. The energy supply risks and robust fundamentals in the US have heightened inflation concerns, prompting traders to price in a more hawkish Federal Reserve.
Sim Moh Siong, FX strategist at OCBC, said that if energy market tensions persist and inflation risks continue to build, 'the greenback could overshoot in the near term.'