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Dollar rises on Iran tensions as oil pushes rate-hike bets
The Bloomberg Dollar Spot Index rose 0.3%, with traders pricing a September Fed hike and some bets on a move as early as next week.
The dollar jumped on Thursday as intensifying conflict in the Middle East heightened concerns about energy supply disruptions and strengthened expectations that interest rates will stay higher for longer, LiveMint Markets reported. The Bloomberg Dollar Spot Index rose 0.3%, putting the index on track for its best week in a month.
Market pricing shifted toward faster Federal Reserve action, with traders fully pricing a rate hike in September and some seeing a possibility of a move as early as next week. The report also linked the dollar’s gains to renewed inflation worries as oil pushed higher, with crude topping $100 a barrel.
Yields on benchmark 10-year U.S. Treasuries hit a year-to-date peak amid the higher-for-longer outlook, and the dollar advanced against nearly all major peers. The Swiss franc fell to its lowest level in over a year, while the yen weakened to as much as 163.99 per U.S. dollar.
Geopolitical risk added to the move, according to the report, after the Iran-backed Houthis claimed their first attack on commercial ships in recent months and President Donald Trump said he would hold Iran responsible for any further attacks. The article said the market was divided on the July decision, pricing about a 35% chance of a quarter-point hike.
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