Dollar Holds Near Two-Month High on Iran Tensions

After Donald Trump rejected a peace deal with Iran over the Strait of Hormuz, Brent crude rose more than 1% to above $106 a barrel and the dollar index held at 101.15, on track for a 1.7% September gain, its best month since June. CME FedWatch showed a 65% chance of a Fed rate hike at the end-October meeting. The yen traded at 157.7 per dollar after Satsuki Katayama and Scott Bessent reaffirmed concern over yen undervaluation; the euro, sterling, Australian dollar, kiwi and offshore yuan saw limited moves, the yuan after the Trump-Xi three-day summit ended without major public breakthroughs. "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. The bank expects a moderate dollar rally into year-end. Sources show no disagreement on the figures or events. No left- or right-coded coverage was identified; only center-rated coverage appeared. Next are the PCE Index, China PMIs, non-farm payrolls, Japan and euro zone CPIs, and an expected RBA 25-bps rise to 4.60% as the cycle's final hike.