Dollar Surges as Yen Hits New Lows Amid Rising Oil Prices and Inflation Fears
The US dollar is poised to post its biggest weekly gain since mid-June, while the yen is on track for its largest weekly percentage decline in over two months. The dollar's strength comes as oil prices rise, with Brent crude retreating from a two-month high of $102 hit on Thursday.
Renewed strikes in the Iran war have caused a reversal in oil prices, fanning inflation fears and bolstering expectations that the US Federal Reserve may hike interest rates. The U.S. economy is seen as more insulated from energy price shocks compared with Europe and Japan.
The yen has been under pressure, languishing at 40-year lows despite Japan's pledges to support the currency. Verbal efforts to prop up the yen have had limited effect, with some analysts suggesting that another intervention by Japanese officials may only be short-lived without coordinated steps such as more aggressive rate hikes by the Bank of Japan.
The U.S. Treasury Department has joined calls for rate hikes by the BOJ, warning that excessive currency volatility is undesirable. The dollar index inched up 0.01% to 101.46 and was up about 0.7% for the week, on track for its biggest weekly gain in five weeks.