The U.S. dollar held firm near a two-month high on Monday, with the dollar index trading near 101.14 and on track for a 1.7% monthly gain — its strongest performance since June. The move came as Brent crude futures climbed more than 3% to above $107 a barrel after President Donald Trump rejected an Iran peace proposal, keeping the Strait of Hormuz and Middle East energy supply risks in focus.
According to Reuters, Brent reached $106.92 a barrel, while WTI climbed to $94.49. Although preliminary Kpler data cited by Reuters showed Middle East crude exports rebounded to around 12.8 million barrels per day in September, traders remain focused on the risk of future disruption rather than current flows. “The greenback could overshoot in the near term if energy market tensions persist and inflation risks continue to build,” said Sim Moh Siong, FX strategist at OCBC.
Energy-driven inflation concerns have pushed markets to price a 65% chance of a quarter-point Federal Reserve rate hike at the October 28 meeting. Key data this week — the PCE inflation index on Wednesday and non-farm payrolls on Friday — could reinforce tightening expectations. “Data could re-emerge as a primary driver for the dollar this week,” said ING FX strategist Francesco Pesole.
Other major currencies also moved on central bank signals. The euro weakened to around $1.138, near a two-month low, while sterling held near $1.325. The yen strengthened to about 156.75 per dollar after Japan’s top currency official Atsushi Mimura backed a stronger yen stance, and Japan reported its fastest service-sector inflation in more than two years. The Reserve Bank of Australia is expected to raise its cash rate by 25 basis points to 4.60% on Tuesday, a near 15-year high, with the Australian dollar trading around $0.7016. China’s offshore yuan firmed slightly to 6.7159 per dollar after a three-day Trump-Xi summit produced no major public breakthroughs.
For crypto markets, the combination of a stronger dollar, rising Treasury yields, and expectations of further Federal Reserve tightening creates a more challenging risk-asset environment.
