Dollar hovers near 18-month high as Gulf unrest, US inflation keep investors on edge
SPY•The dollar index rose 0.16% to 102.39, near last week’s 18-month high, as Middle East tensions supported safe-haven demand ahead of US inflation data. Bullish dollar positions climbed to about $36 billion in the week to October 7, while markets priced an 81% chance the Fed would hold rates this month.
1. Dollar supported by caution
The dollar held near an 18-month high on Monday as escalating Middle East conflict kept investors cautious ahead of US inflation data later this week. The dollar index rose 0.16% to 102.39, just below last week’s high. Investor bullish positions on the dollar increased to around $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. Traders priced in an 81% chance the Fed would hold rates, up from 51% a month earlier. Oil prices were volatile after Houthi strikes on Saudi Arabia and attacks on two tankers; Brent rose 2.09% to $106.80 a barrel.
