Dollar Surges to Two-Week High Amid Energy Shock Concerns

The US dollar has surged to a two-week high due to concerns about the economic impact of the energy shock and diverging monetary policy paths across major economies. The conflict between the US and Iran, which saw significant exchanges of fire on Wednesday, has also contributed to the greenback's rise.

According to George Brown, senior economist at Schroders, 'We expect the ECB to finish its hiking cycle by the end of the year, while the Federal Reserve will likely be just beginning to raise rates.' This difference in monetary policy is expected to widen rate differentials in favor of the dollar and lead to a weaker euro.

The dollar index rose 0.11 percent to 99.76, with the euro down 0.16 percent at $1.1575. The yield on the benchmark US 10-year note reached 4.812 percent before retreating to 4.804 percent. Markets are now pricing in a 70 percent chance of a September Fed hike, up from around 40 percent a week earlier.