Key facts
- The dollar index was slightly down at 102.14 but near an 18-month peak.
- Brent crude futures were down 1% at $103.55 per barrel.
- US consumer price index report is due Wednesday.
- Traders are pricing in an 81% chance of the Fed standing pat this month.
- Bitcoin rose 0.2% to $83,788.50.
- Ether edged 0.15% up to $2,540.08.
The dollar held near an 18-month high in early Asian trade on Monday, with investors wary of an escalating Middle East conflict and awaiting key US inflation data later in the week. The dollar index, which measures the greenback's strength against a basket of six currencies, was slightly down at 102.14 but remained close to the peak it scaled last week.
Oil prices fluctuated as Yemen's Iran-backed Houthis increased strikes on Saudi Arabia while two tankers were attacked over the weekend. Brent crude futures were down 1% at $103.55 per barrel in Asian hours. Analysts at Commonwealth Bank of Australia noted that they expect Houthi attacks to continue, supporting oil prices and the USD, and do not anticipate a breakthrough in Iran's confirmation of receiving a US peace proposal.
Against the yen, the US dollar was down 0.14% at 158.160 yen. The Australian dollar and its kiwi counterpart were both roughly flat. Trading was confined to a tight range, with Japanese markets closed for a holiday, thinning liquidity across the region.
The market's focus is shifting to Wednesday's US consumer price index report, a key release before the Federal Reserve's late-October meeting on interest rates. Last week's data showed a slump in US consumer sentiment due to the rising cost of living. The Fed raised rates last month to curb inflation, and traders are pricing in an 81% chance of the Fed holding rates steady this month, an increase from 51% a month ago, according to the CME FedWatch tool.
Barclays analysts suggested the dollar's rally might pause, with a possible pullback, as sharp moves in bond markets have tightened global financial conditions. They believe this could prompt Fed officials to adopt a more reassuring tone if the CPI reading is soft. Severe bond market selloffs in recent weeks have raised concerns about rising borrowing costs globally.
The euro was up nearly 0.1% at $1.121, extending its fifth consecutive week of losses, partly due to concerns over France's fiscal health amid political uncertainty. OCBC FX strategists expect EURUSD to consolidate, with any euro rally likely capped by Europe's structural challenges.
The British pound was little changed at $1.3245. Against the Chinese yuan, the US dollar was flat at 6.6927 yuan in offshore trade.
In cryptocurrencies, bitcoin rose 0.2% to $83,788.50, while ether edged 0.15% up to $2,540.08.