Dollar steadies after gains as Middle East tensions lift energy prices
The U.S. dollar held its recent gains while the yen slipped, amid rising oil prices sparked by conflict in the Red Sea region.
The dollar index remained firm after a modest rise, buoyed by producer price data that matched expectations and a rebound in energy prices. Brent crude futures rose more than 1% to roughly $108.96 a barrel, extending a six-day rally after the Iran-aligned Houthis captured the Yemeni port of Mocha and moved toward strategic Red Sea islands. The yen slipped to just above 154 per dollar, whereas the euro gained against the yen following the European Central Bank’s second rate increase this year.
The Australian dollar held steady at about $0.7160, and the New Zealand kiwi edged up to $0.5805. Investors are focused on upcoming U.S. CPI figures, with Fed funds futures indicating a roughly 71% chance of a 25-basis-point hike at the September meeting. Treasury yields rose, and Bitcoin and Ether each fell around 0.8%.
How the sides frame it
LOW AGREEMENTCenter coverage emphasizes the dollar’s steadiness tied to producer-price data and rising energy prices from Middle-East tensions, while right-leaning coverage centers on the Chinese yuan’s stability and the People’s Bank of China’s actions ahead of U.S. CPI data.
CENTER
The dollar index remains firm, buoyed by producer-price data and a rebound in energy prices linked to Middle-East tensions.
RIGHT
The yuan holds steady near 6.71 per dollar as the People’s Bank of China seeks stability ahead of U.S. CPI, despite higher U.S. Treasury yields.
The right emphasises
- Yuan steadies around 6.71 per dollar
- PBOC’s midpoint fixing strongest since early 2023
- Analysts warn stability may be short-lived ahead of U.S. CPI
How this story developed
- Aug 19 Fed officials warn higher rates may be needed if inflation stays elevated
- Sep 5 U.S. Central Command announced the destruction of three Iran-linked oil tankers—M/T Downy off Kharg Island, M/T Stark 1 near Jask and M/T Kylo in the Gulf of Oman.
- Sep 6 He said Tehran’s response to US strikes would no longer be “proportionate”, adding that “the Americans have surely realised that the era of ‘proportionate responses’ has come to an end”.
- Sep 7 Iran claimed to have hit an unmanned U.S. vessel in the Strait of Hormuz, which the U.S. dismissed as false.
- Sep 8 Iran announced it will double the price of fuel consumed beyond its quota.
- Sep 8 Iran’s Fars news agency reported an explosion heard in the southern Jask area off the Gulf of Oman and east of the Strait of Hormuz.
- Sep 10 Oil prices have risen above $95 a barrel amid renewed Middle‑East tensions.
- Sep 10 New reporting highlights a sharp inflation jump and rising fuel costs, reinforcing expectations of a deposit‑rate increase.
- Sep 10 The ECB implemented a 0.25‑point rate increase across its three principal rates.
- Sep 11 Asian stock markets fell on Friday, mirroring Wall Street losses, while Brent crude rose above $108 a barrel as geopolitical strains between the United States and Iran intensified.
- Sep 11 Fed minutes revealed a 9‑3 vote to keep rates near 3.6% and a drop in market odds for a September hike to about 67%.
- Sep 11 August US CPI held steady at 3.4% year‑over‑year and core CPI fell to 2.4%.
- Sep 12 Oil prices rose to just below $109 a barrel as Middle‑East tensions escalated.
- Sep 12 Markets priced in a strong chance of another quarter‑point hike in December.
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