The dollar strengthened following the release of the US Producer Price Index (PPI), sending dollar-yen temporarily higher to around ¥154.65. The market is pricing in a higher probability of a Federal Reserve rate hike, and expectations are shifting ahead of next week's FOMC meeting.
The dollar strengthened in today's New York session following the release of the US PPI, temporarily pushing dollar-yen higher to around ¥154.65. The market is now pricing in a higher probability of a Federal Reserve rate hike, while rate-hike expectations for next week's FOMC meeting have also risen in the short-term funding market.
Crude oil prices continued to rise, with WTI futures breaking above $100. Concerns that escalating tensions in the Middle East could disrupt supply are intensifying inflationary pressures and fueling fears that interest rates will remain high.
There were reports that Saudi Arabia had indicated a production cut of around 201 in its monthly production report to the OPEC Secretariat, increasing the impact on major Middle Eastern oil producers. Some observers also noted that August crude oil production fell to its lowest level since 1990. With the August CPI release approaching, the market is seeking to assess the further course of interest rates.
As for dollar-yen developments related to the euro, the euro has fluctuated, but the dollar has remained broadly firm. The pair has continued to trade below its daily moving average, leaving room for a short-term rebound, although no trend reversal has been confirmed. Near-term upside resistance is seen around ¥155, with support around ¥153.