Dollar Strength Boosted by Rising Oil and Bond Yields

The US dollar gained strength as oil and bond yields rose, fueling inflation concerns. The New Zealand dollar (NZD) fell despite a 25 basis point rate hike by the Reserve Bank of New Zealand (RBNZ), with its pair against the USD rising only 0.9% to 0.5843.

The RBNZ's move was seen as less hawkish than expected, leading to lower wholesale rates and a weaker NZD. ANZ analysts said the policy track doesn't point to another increase in October, and language around future decisions is deliberately vague and highly conditional.

The dollar's haven appeal was also boosted by rising Treasury yields and growing expectations of a September Federal Reserve rate hike. The probability of a September Fed hike rose to 68% from about 40% a week earlier, according to CME FedWatch.