Key facts
- The U.S. dollar index was trading flat at 99.084.
- U.S. consumer prices increased 0.4% in August.
- Brent crude futures were down 0.6% at $106.99 a barrel.
- The U.S. dollar was down 0.2% at 154.105 yen.
- New Zealand's 10-year government bond yields rose 15.5 basis points to 5.06%.
The U.S. dollar held near weekly highs in Asian trading on Friday, buoyed by fears of energy supply disruptions in the Middle East that pushed up bond yields and oil prices. The U.S. dollar index was trading flat at 99.084.
Following the release of U.S. consumer price index data, which showed a 0.4% increase in August, markets are reinforcing expectations of a Federal Reserve interest rate hike next week. Fed funds futures are pricing in a 71.1% probability of a 25-basis-point hike at the central bank's upcoming meeting.
Brent crude futures were down 0.6% at $106.99 a barrel, though remained above the $100 mark earlier in the week. The U.S. dollar was down 0.2% against the yen at 154.105 yen, on track for its second consecutive weekly decline. The euro also slipped 0.2% against the yen to 178.99 yen, following the European Central Bank's interest rate hike on Thursday.
In New Zealand, the kiwi dollar was up 0.5% at $0.5827, and 10-year government bond yields rose 15.5 basis points to 5.06%, extending the biggest two-day jump in borrowing costs since last year. The Australian dollar was up 0.2% at $0.7167.
Barclays analysts noted that 10-year U.S. Treasury yields are approaching 5%, suggesting bonds are not yet cheap and catalysts for a rally are not imminent. Fixed-income markets remain uneasy after the U.S. Treasury Department increased the size of its long-dated bond repurchase, with a gauge of bond volatility rising to its highest level in a month. The yield on U.S. 10-year government bonds was up 1.5 basis points at 4.957%.