Dollar stays near 18-month high as Mideast conflict, inflation data in focus

Business Recorder reported that the dollar stayed near its highest point in about 18 months in early Asian trading on Monday. Investors remained cautious as the Middle East conflict escalated, with US inflation data due later this week seen as a key input for monetary policy. Oil prices moved both up and down after Yemen's Houthis expanded strikes on Saudi Arabia and two tankers came under attack over the weekend.

Brent crude was down 1 per cent at $103.55 a barrel in Asian hours, while the dollar index slipped slightly to 102.14, still close to last week's peak. Trading stayed thin because Japanese markets were shut for a holiday. Analysts at Commonwealth Bank of Australia expect the Houthi attacks to keep supporting oil and the greenback, but see no breakthrough this week in the US peace proposal Iran has received.

Focus now shifts to Wednesday's US consumer price index, one of the final big data points ahead of the Federal Reserve's late-October policy meeting. Barclays analysts suggested the dollar could take a breather, while Fed officials might sound more reassuring should the CPI figure come in weak after sharp bond market moves. The euro rose nearly 0.1 per cent to $1.121 after recording its fifth straight weekly decline, while the pound was little changed at $1.3245.