Dollar Soars to 17-Month High on Inflation Fears and Euro Concerns

The US dollar has reached a 17-month high as bond yields surge due to inflation fears driven by higher oil prices and concerns over French fiscal health. The euro is near its lowest level in 17 months, trading at $1.1237.

Moh Siong Sim, currency strategist at OCBC, attributed the initial move in yields to rising energy prices but noted that European fiscal risk concerns took center stage. This led to a flight into liquid and defensive sovereign markets, with US Treasuries and German Bunds seeing higher demand.

The dollar strength is mainly skewed towards European currencies, except for the Swiss franc, which has seen a revival in its safe-haven status. The sterling and Australian dollars have hit three-month lows before steadying slightly.

Attention now shifts to the US payrolls report due later today, with job growth expected to slow in September and the unemployment rate forecasted at 4.1% for a third consecutive month.