Dollar Rises Amid Higher Crude Oil Prices, T-Note Yields
The U.S. dollar gained on Thursday as crude oil prices surged by nearly 6%, reaching a 3.5-month high and raising inflation expectations that could prompt the Federal Reserve to raise interest rates. The rise in Treasury note yields also strengthened the dollar's appeal due to improved rate differentials, while falling stock markets increased demand for liquidity in U.S. dollars. The dollar index rose by +0.26%, supported further by positive economic data including stable jobless claims and stronger-than-expected August producer price inflation (PPI). However, it later retreated slightly after existing home sales fell to a 14-month low. The euro weakened against the dollar due to rising crude oil prices hurting energy-dependent economies like Europe's, though losses were limited by an expected ECB rate hike and improved GDP forecasts for the Eurozone. The yen also declined as higher U.S. Treasury yields made it less attractive compared to the dollar. However, hawkish comments from a BOJ board member and speculation about potential changes in Japan’s GPIF asset allocation provided some support.
Topics: crude oil prices dollar fed policy expectations treasury yields