"The US dollar retreated slightly after a week of strong gains, but held near six-week highs as geopolitical risks and elevated Treasury yields continued to support the currency."
"Persistent tensions in the Middle East remain a key driver of market sentiment, reinforcing demand for the dollar through both safe-haven flows and a stronger interest rates outlook."
"Concerns that the Strait of Hormuz could remain closed for an extended period continue to place upward pressure on oil prices, sustaining fears that energy costs may fuel more inflation."
"Last week's CPI and PPI releases indicated that higher energy prices are increasingly impacting the broader economy, raising concerns that inflationary pressures may prove more persistent than previously anticipated. As a result, the Federal Reserve is increasingly expected to raise interest rates next year, a notable shift in forecasts compared with earlier in the year."
The US dollar eased slightly after a week of strong gains but remained close to six-week highs. Geopolitical tensions in the Middle East continued to support safe-haven demand and reinforced expectations for higher interest rates. Concerns that the Strait of Hormuz could remain closed for longer kept oil prices under upward pressure, raising fears that energy costs could sustain inflation. Benchmark 10-year Treasury yields stayed elevated at their highest level since May 2025 as markets reassessed the monetary policy path. Recent CPI and PPI data showed higher energy prices affecting the broader economy, increasing concerns about persistent inflation. The Federal Reserve is increasingly expected to raise interest rates next year. Investors will watch FOMC meeting minutes, PMI data, and upcoming ADP employment figures for further signals and potential volatility.
Read at London Business News | Londonlovesbusiness.com
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