Dollar Strengthens as Middle East Energy Fears Fuel Rate Hike Bets

The US dollar held near its highest levels of the past week in Asian trading on Friday, as renewed fears of energy supply disruptions in the Middle East pushed up bond yields and oil prices. The DXY index, which measures the greenback's strength against a basket of six currencies, was trading flat at 99.084, after strengthening to its highest level since September 7 during the previous session.

The dollar's rise followed the release of data showing US producer prices increased 0.4% in August, meeting market expectations as energy prices rebounded during the month. Tony Sycamore, a market analyst at IG in Sydney, said 'the safe-haven U.S. dollar gained on risk-aversion flows, helped by higher energy prices that have lifted the chance of a Fed hike next week to 70%.'

Energy prices snapped a five-day gaining streak, with WTI crude oil down 0.6% at $106.99 a barrel in Asian trade. However, both major benchmarks remained above the $100 mark earlier this week.