Oil Shock Sends Ripples Through Currency Markets Amid Global Bond Yield Surge
Currency markets have been subdued in cautious trading as investors weigh the impact of surging oil prices and global bond yields. The recent energy-induced inflation pressure has sent benchmark 10-year U.S. Treasury yields back on an upward trajectory, reaching their highest levels since 2023.
The price of Brent crude remained above $100 a barrel after breaching that level on Wednesday, with Iran and the U.S. engaging in the biggest wave of attacks on shipping by both sides since the start of the war, threatening to worsen energy supply disruptions from the Middle East.
The greenback found some marginal relief, leaving the euro and British pound slightly weaker at $1.1633 and 1.3547 respectively. The Japanese currency's climb to fresh seven-month highs was also paused, with the yen last trading a shade weaker at 153.70 after being mostly stuck in a tight trading range ahead of an expected Bank of Japan rate hike next week.
Attention is now focused on macroeconomic data releases, particularly U.S. inflation readings, including producer prices later on Thursday and CPI on Friday. These numbers will be closely watched for clues on the Federal Reserve's next policy move amid concerns that inflation pressures remain sticky.