Dollar firms as US-Iran tensions lift oil, hawkish Fed bets build

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The dollar edged higher on Monday, holding near a two-month high, as US-Iran tensions lifted oil prices and traders priced in a more hawkish Federal Reserve. The dollar index reached 101.15, on track for its best month since June. The euro and sterling both fell 0.1% against the dollar, with the euro at $1.1379 and sterling at $1.3232. Oil prices climbed over 1%, with Brent above $106 a barrel, after President Trump rejected a peace deal with Iran. Markets now see a 65% chance of a Fed rate hike at the end of October. The yen dropped 0.3% to 157.7 per dollar, while the Australian dollar fell 0.07% to $0.7017. Offshore yuan weakened to 6.7235 per dollar after the Trump-Xi summit yielded no breakthroughs. Upcoming US data releases, including the PCE Index and non-farm payrolls, are expected to support further policy tightening.


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