Dollar holds firm as Middle East hostilities lift oil

Business Recorder reported that the dollar held steady on Wednesday as fresh hostilities in the Middle East pushed oil higher and renewed fears of inflation. Brent futures rose 0.92% to $95.52 a barrel, while US West Texas Intermediate crude gained 0.89% to $91.02, building on the previous session's gains. The dollar index, which tracks the greenback against a basket of currencies, stood at 99.67 after Washington launched airstrikes on Iran and Tehran retaliated.

Support for the greenback has come from rising yields on US Treasury bonds and growing bets on a Federal Reserve rate increase, even though recent American economic data came in below forecasts. According to CME Group's FedWatch tool, markets now put a 67% chance on a September hike, up from about 40% a week earlier. Fed Governor Michael Barr said on Tuesday that the central bank would need to raise rates if inflation fails to ease quickly.

The yen stayed at 160.21 per dollar, beyond the psychologically important 160 level, despite strong expectations that the Bank of Japan will lift rates this month. US Treasury Secretary Scott Bessent backed decisive monetary steps against yen weakness after meeting BOJ Governor Kazuo Ueda. The joint US and Japanese intervention at the end of July only briefly pulled the currency away from its 40-year low of 163.99, and it has since given back about half of those gains.