The US dollar remained near an 18-month high in global markets on Monday as escalating tensions in the Middle East boosted demand for the safe-haven currency ahead of the release of key US inflation data later this week.
Oil markets also remained volatile following intensified attacks by Iran-backed Houthi rebels in Saudi Arabia. Brent crude futures fell 0.5 percent to around $104 a barrel. Despite the recent decline, oil prices remained about 45 percent above their levels before the conflict began, following US President Donald Trump’s announcement of an energy ceasefire between Russia and Ukraine.
The dollar index, which measures the greenback against a basket of six major currencies, edged down to 102.16 but remained close to its highest level in 18 months, reached last week.
According to data from the US Commodity Futures Trading Commission, investors’ net bullish positions on the dollar rose to around $36 billion in the week ended October 7, up sharply from $8.4 billion three weeks earlier.
Lee Hardman, a currency strategist at MUFG, said the dollar had strengthened recently because of adverse developments abroad, enhancing its appeal to investors.
Markets are now focused on the US consumer price index (CPI), scheduled for release on Wednesday. The report is expected to provide important clues about the Federal Reserve’s policy decisions and interest-rate outlook at its meeting later this month.
The Fed raised interest rates last month for the first time since 2023 in an effort to curb inflation.
Chris Weston, head of research at Pepperstone, said a further rate hike in October was unlikely. However, stronger-than-expected inflation figures could raise questions about whether the central bank would increase rates again in January.
Meanwhile, the euro traded steadily at around $1.12 but remained on course for a fifth consecutive weekly decline amid political uncertainty and fiscal concerns in France.
Currency strategists at OCBC Bank said it remained unclear whether higher borrowing costs would be sufficient to force the French government to adopt greater fiscal discipline.
The Japanese yen was little changed at 158.41 per dollar amid a market holiday in Japan, while the British pound gained 0.1 percent to $1.3244. The Indian rupee strengthened 1.1 percent against the dollar to 95.7 per dollar
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