Dollar steady near 18-month high as Mideast conflict, US inflation in focus
SPY•The dollar index was slightly lower at 102.16 but remained near its 18-month high as investors watched the escalating Middle East conflict and awaited Wednesday’s US inflation data. Traders priced an 81% chance that the Federal Reserve would leave rates unchanged this month, up from 51% a month earlier.
1. Dollar holds near peak
The dollar held near its strongest level in a year and a half on Monday as the Middle East conflict kept investors wary ahead of US inflation data. The dollar index was down slightly at 102.16, with trading in a tight range as Japanese markets were closed for a holiday.
2. Oil and rate outlook
Oil prices were volatile after Yemen’s Iran-backed Houthis stepped up strikes on Saudi Arabia and two tankers were attacked over the weekend. Brent crude was down 1.4% at $103.30 a barrel in Asian trading. The US Consumer Price Index report is due Wednesday, before the Federal Reserve’s late-October rate meeting. Traders priced an 81% chance of rates staying unchanged this month, compared with 51% a month earlier.
3. Other currencies move
The euro rose nearly 0.1% to $1.121 after five consecutive weekly declines. The Indian rupee gained 1% to 95.8 per dollar after the central bank redirected oil companies’ dollar purchases away from the spot market, while the South Korean won rose 0.5% to 1,334 per dollar.
