Oil Price Spike Sends Currency Markets into Cautious Trading Mode

Currency markets were subdued on Thursday as investors digested a sharp increase in oil prices and global bond yields. The US dollar index, which measures the dollar's value against a basket of currencies, reached 98.81, narrowly avoiding a three-week low.

The dollar received some support, causing the euro and sterling pound to trade slightly weaker at $1.1633 and $1.3547 respectively. Meanwhile, the yen's rally paused ahead of key US inflation readings.

The New Zealand dollar was 0.2% stronger at $0.5848, while the Australian dollar remained flat at $0.7215. China's offshore yuan hovered near its strongest level in nearly four years, trading at 6.705 per dollar.