Dollar near two-week high as oil surge lifts yields, Fed hike bets
Risk appetite weakens after stock markets tumbled and AI-related shares come under pressure over calls for slower development.
On Tuesday, the dollar index rose to near a two-week high as oil prices surged, pushing up Treasury yields and increasing the likelihood of a Federal Reserve interest rate hike this week. Meanwhile, the euro and British pound weakened against the dollar, with sterling at US$1.3494 and the euro at US$1.1538. The yen also weakened, falling close to a seven-month low at 154.72 yen per dollar.
This followed Saudi Arabia and Iran postponing talks, and Saudi Arabia accusing Iran of firing missiles. Oil prices neared US$107 a barrel, nearing a four-month high, driven by the Houthi attack. Inflation concerns intensified as August consumer prices and jobs data showed stronger-than-expected growth, bolstering the case for a Fed rate hike this week.
According to Reuters' estimates, the Fed will raise rates at least once by the end of March. Analysts believe that with inflation pressures stemming mainly from oil prices, the US dollar may only continue to strengthen slightly, unless the Fed decides to implement more tightening measures.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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