Dollar firm near 18-month highs as Gulf unrest, US inflation keep investors on edge
TLT•The dollar index rose 0.2% to 102.43, just below an 18-month high, as investors awaited US inflation data amid escalating Middle East tensions. Bullish dollar positions climbed to about $36 billion, while markets priced an 81% chance the Fed would hold rates this month.
1. Dollar near recent high
The dollar traded around its highest level in a year and a half on Monday as the Middle East conflict kept investors wary ahead of US inflation data later this week. The dollar index rose 0.2% to 102.43, just below last week's high. Investor bullish positions in the dollar increased to about $36 billion in the week to October 7, from $8.4 billion three weeks earlier.
2. Inflation in focus
Wednesday's US consumer inflation report is one of the last major economic releases before the Federal Reserve's policy meeting this month. Markets priced in an 81% chance that the Fed would hold rates, up from 51% a month earlier. Strategists said a hotter inflation reading could raise the question of whether the Fed might hike again in January.
3. Currencies diverge
The euro fell 0.22% to $1.1176, while the dollar edged up to 158.61 yen. The Indian rupee rose 1.1% to 95.7 against the dollar after the central bank diverted oil companies' dollar purchases away from the spot market. Oil prices were volatile after Houthi strikes on Saudi Arabia and attacks on two tankers over the weekend.
