Dollar Strengthens Amid Oil Price Surge and Inflation Concerns

The US dollar maintained its strength near a two-week high on Wednesday due to rising oil prices and increased inflation concerns.

Renewed hostilities in the Middle East led to a surge in oil prices, with Brent futures up 0.75% at $95.36 a barrel and WTI crude 0.41% firmer at $90.62.

The yield on the benchmark US 10-year note rose to as high as 4.812%, its highest since November 2023, before retreating to 4.804%. Daisuke Shimazu, chief market strategist at Sumitomo Mitsui Trust Bank, attributed the dollar's appeal to rising Treasury yields and growing expectations of a Federal Reserve rate hike.

The New Zealand dollar slumped 1.01% against the greenback to $0.5844, its lowest since August 13, despite the country's central bank raising its official cash rate by 25 basis points to 2.75%. Analysts said market participants viewed the decision as less hawkish than expected.