Oil Surge and Higher Yields Keep Currency Markets in Check

Currency markets were subdued on Thursday as investors weighed a fresh surge in oil prices and global bond yields.

The price of oil remained above $100 a barrel after breaching that level on Wednesday, following a wave of attacks on shipping by Iran and the US, threatening to worsen energy supply disruptions from the Middle East.

The energy-induced inflation pressure sent global bond yields higher, with benchmark rates hitting their highest levels since 2023 as a longer-dated bond buyback programme disappointed.

The greenback found some relief, leaving the euro and sterling slightly weaker. The Japanese currency's rally to fresh seven-month highs paused ahead of an expected Bank of Japan rate hike next week.