Dollar Strengthens Amid Renewed Fears of Middle East Energy Disruptions

The US dollar continued its upward trend on Friday as investors turned to safe-haven assets amidst renewed fears of energy supply disruptions in the Middle East. The dollar index, which measures the greenback's strength against a basket of six currencies, held steady at its highest level since September 7.

The rise was attributed to higher energy prices, with Brent crude futures rising 1.2% to $83.41 a barrel as trading resumed in Asia. Energy prices have extended gains into a sixth day, and the increased chance of a Federal Reserve hike next week has lifted this probability to 70%, according to Tony Sycamore, market analyst at IG.

The yen slipped for a second day against the dollar, while the euro strengthened by a similar magnitude. However, the Japanese currency regained some strength after data released on Friday showed wholesale inflation rose 7.6% in August from a year earlier, bolstering the case for a rate hike this month.