Oil Surge Sends Global Yields Soaring as Central Banks Weigh Rate Hikes

Currency markets were subdued on Thursday as investors weighed a fresh surge in oil prices and global bond yields. The dollar found little support ahead of inflation readings that could shape the U.S. Federal Reserve's policy outlook.

Brent crude futures remained firmly above $100 a barrel after breaching the level on Wednesday, driven by intensified Middle East maritime conflict threatening energy supplies from the region.

Global bond yields rose in response to fresh energy-induced inflation pressure, with benchmark 10-year Treasury yields hitting their highest levels since 2023. However, the dollar index gave up earlier gains and eased to 98.73.

The European Central Bank is expected to raise interest rates on Thursday for the second time this year, while the Bank of Japan is set to hike its rate to 1.25% on September 18 amid concerns over persistent inflation and yen weakness.