Dollar Strength Boosts Inflation Concerns, Yen Remains Weak
Asian currencies traded mixed on Thursday as the U.S. dollar held near its two-month high. The yen steadied near a three-week low after Japan returned from holidays, while South Korean markets were closed for the Chuseok holiday.
The dollar's gains followed stronger-than-expected U.S. manufacturing data that revived concerns about inflation. This led to increased bets on an October rate hike by the Federal Reserve, with CME FedWatch pricing now implying almost a 70% chance of an increase, up from about 50% a week ago.
Oil prices added to the inflation pressure, settling around $103 a barrel after rising almost 4% on Wednesday. The move followed Iranian President Masoud Pezeshkian's pledge that Tehran would not surrender, while markets also assessed U.S. efforts to restrict diesel exports.