Dollar holds gains, yen slips as Mideast energy shock deepens
SINGAPORE: The dollar held near its highest levels of the past week and the yen slipped for a second day at the start of Asian trading on Friday as renewed fears of energy supply disruptions in the Middle East pushed up bond yields and oil prices. The US dollar index , which measures the greenback’s strength against a basket of six currencies, was trading at 99.081, holding steady after gaining…
The dollar maintained its upward momentum from Thursday, with the US Dollar Index holding steady at 99.081 following a 0.3% gain. This surge was driven by heightened demand for the safe-haven currency amid concerns over potential energy supply disruptions in the Middle East. Energy prices surged on Friday, with Brent crude futures rising 1.2% to $108.96 a barrel as trading resumed in Asia. The Japanese yen, meanwhile, weakened for a second consecutive day, trading at 154.615 yen against the greenback.
The euro and British pound remained virtually unchanged against the dollar, trading at 179.49 yen and $1.3510, respectively. Federal Reserve markets were closely watching Friday's release of U.S. CPI data, one of the final key economic indicators before the central bank's meeting. Fed funds futures now indicate a 71.3% probability of a 25-basis-point rate hike at the upcoming meeting, up from 61.2% the previous day.
Bond markets remained cautious, with the yield on U.S. 10-year government bonds inching closer to 5%. The yield rose 2.3 basis points to 4.965%, reflecting growing reassessment of the Fed's path higher and the term premium hovering near pre-GFC levels. However, analysts cautioned that bonds were not yet undervalued, and there were no immediate catalysts for a rally. In the cryptocurrency market, Bitcoin fell 0.8% to $76,624.32, while Ether declined by a similar margin to $2,443.18.
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