Dollar firm near 18-month highs as Gulf unrest and US inflation keep investors on edge
TLT•The dollar hovered near 18-month highs as Middle East conflict unsettled investors ahead of US inflation data. Bullish dollar positions rose to about $36 billion in the week to October 7, while markets priced an 81% chance that the Fed will hold rates this month.
1. Dollar holds near highs
The dollar index was slightly lower at 102.16 on Monday but remained near last week's 18-month highs as escalating Middle East conflict kept investors wary. Oil prices were volatile after Houthi strikes on Saudi Arabia and attacks on two tankers over the weekend.
2. Inflation data in focus
Investors are watching Wednesday's US consumer inflation report ahead of the Federal Reserve's policy meeting this month. Markets priced an 81% chance that the Fed would hold rates, up from 51% a month earlier; bullish dollar positions climbed to about $36 billion in the week to October 7, from $8.4 billion three weeks earlier.
3. Currencies diverge
The euro was steady at $1.12 after five straight weeks of losses, while the dollar was flat at 158.41 yen. The Indian rupee rose 1.1% to 95.7 per dollar after India's central bank diverted oil companies' dollar purchases away from the spot market.
