Currency markets subdued as oil shock lifts global yields; ECB, US inflation eyed

Currency markets moved sideways on Thursday, with traders reacting to a renewed rise in oil prices and higher global bond yields, Business Recorder reported. Brent crude stayed above $100 a barrel, having crossed that mark on Wednesday, after the heaviest exchange of shipping attacks between Iran and the US since the war began. Benchmark 10-year Treasury yields climbed to their highest since 2023, after a buyback of longer-dated bonds disappointed.

The dollar edged up, leaving the euro at $1.1633 and sterling at 1.3547, while the yen eased to 153.70 after pausing its climb to seven-month highs. The dollar index stood at 98.81, moving away from a three-week low. Pricing in markets points to roughly a 60% likelihood that the Fed lifts rates this month, following a jobs report on Friday that beat forecasts.

The European Central Bank is expected to raise rates on Thursday for a second time this year, with signals it could tighten further if inflation fails to improve. The Bank of Japan is expected to lift its policy rate to 1.25% on September 18. US producer and consumer price data are due this week, ahead of the Federal Open Market Committee session scheduled for September 15 to 16.