$Dollar Surges to Two-Week High Amid Energy Shock Concerns
The US dollar has reached a two-week high as investors seek safe-haven assets amid growing concerns about the economic impact of the energy shock. The most significant exchange of fire between the US and Iran in weeks has led to increased tensions, causing investors to turn to the dollar. George Brown, senior economist at Schroders, expects the European Central Bank to finish its hiking cycle by the end of the year, while the Federal Reserve will likely begin raising rates, widening rate differentials in favor of the dollar.
The dollar index rose 0.11% to 99.76, with the euro down 0.16% at $1.1575. The yield on the benchmark US 10-year note reached its firmest since November 2023, and markets are pricing in a 70% chance of a September Fed hike.
The Japanese yen rose 0.45% against the greenback to 159.50 per dollar after weakening to its lowest since July 31. BOJ governor Kazuo Ueda said consecutive rate hikes could be a possibility, and US Treasury Secretary Scott Bessent voiced strong support for 'decisive' monetary steps to combat yen weakness.