Dollar Nears 18-Month High
Escalating geopolitical tensions and inflation data push the dollar higher
Translated by Qiyas from الجريدة — Original source
The US dollar hovered near its highest level in a year and a half today, as escalating conflict in the Middle East prompted investors to exercise caution ahead of the release of US inflation data later this week, which will influence monetary policy.
The dollar index, which measures the performance of the US currency against a basket of six currencies, dipped slightly to 102.16 but remained close to its 18-month high recorded last week. Trading remained within a narrow range as Japanese markets closed for a holiday, further reducing liquidity across the region.
Analysts at Commonwealth Bank of Australia said in a note, “We expect the Houthis to continue their attacks on Saudi energy facilities, supporting higher oil prices and the US dollar.”
They added that although Iran confirmed it received a peace proposal from the United States through intermediaries, “we do not anticipate a sudden shift this week.”
Against the yen, the US dollar fell 0.06 percent to 158.245 yen. The Australian dollar and the New Zealand dollar remained virtually unchanged at $0.69815 and $0.56080, respectively.
Beyond geopolitical developments, market focus is turning to the US Consumer Price Index report to be released tomorrow, which will be the latest major economic data published before the Federal Reserve’s (the US central bank) meeting in late October on interest rates.
The Federal Reserve raised interest rates last month for the first time since 2023 to curb inflation, and markets are closely monitoring economic data to assess whether policymakers will take another step.
A CME FedWatch tool indicates that traders expect an 81 percent probability that the US central bank will keep interest rates unchanged this month, up from 51 percent recorded a month ago.
The euro rose approximately 0.1 percent to $1.121, after recording losses for a fifth consecutive week, as the single currency bore the brunt of investor concerns over France’s financial situation amid political uncertainty ahead of the presidential election scheduled for 2027.
The Indian rupee rose 1 percent to 95.8 against the dollar, after the central bank moved to ease pressure on the currency by redirecting oil companies’ dollar purchases away from the spot market.
The South Korean won recorded its highest level in two years, rising 0.5 percent to 1,334 against the dollar.
