Dollar near two-week high as oil surge lifts yields, Fed hike bets

Business Recorder reported that the greenback edged toward a two-week peak on Tuesday in Hong Kong trading, as higher oil prices pushed Treasury yields up and reinforced bets on a Federal Reserve rate increase this week. The dollar index, a gauge of the currency against a basket of peers, was at 99.55. The euro eased to $1.1538 and sterling to $1.3494.

Weaker equities also helped the greenback, with artificial intelligence stocks falling after sector figures urged a slowdown in development to curb possible dangers for mankind. Traders now assign roughly a 93% probability, according to CME's FedWatch tool, to a Wednesday hike, which would be the first in over three years. Crude climbed to $107 a barrel, close to a four-month high, following Houthi strikes on Saudi Arabia and a delay in Gulf-Iran negotiations.

On Friday the Bank of Japan is widely expected to lift rates, and the yen traded 0.2% lower at 154.72, having retreated from a seven-month top. The 10-year Treasury yield went above 5% in the prior session, the first such move since October 2023, and last traded at 4.9895%. BCA analysts argued that economic conditions do not support additional rate increases beyond what the curve already reflects.