World · LA Online
Currency markets treaded water in cautious trading on Thursday as investors weighed a fresh surge in oil prices and global bond yields, while the yen's powerful rally also took a breather ahead of U.S. PPI and inflation readings. Brent crude futures remained firmly above $100 a barrel after breaching the level on Wednesday, as Iran and the U.S. engaged in the biggest wave of attacks on shipping by both sides since the start of the war, threatening to worsen the disruption of energy supplies from the Middle East.
The fresh energy-induced inflation pressure sent global bond yields back on an upward trajectory, with benchmark 10-year Treasury yields hitting their highest levels since 2023 as a buyback programme of longer-dated bonds also disappointed. The greenback found some marginal relief, leaving the euro and sterling slightly weaker at $1.1633 and 1.3547, respectively. That also paused the Japanese currency's climb to fresh seven-month highs, with the yen last trading a shade weaker at 153.70 after being mostly stuck in a tight trading range ahead of an expected Bank of Japan rate hike next week.
The dollar index, which measures the greenback against a basket of currencies, was last traded at 98.81, inching away from a three-week low. Attention is now firmly on macroeconomic data to round out the week. Market focus will later shift to U.S. inflation readings, including producer prices later on Thursday, and CPI on Friday, the last set of key data releases ahead of the FOMC meeting on September 15–16.
Central bank decisions loom: The European Central Bank (ECB) is expected to raise interest rates on Thursday for the second time this year, signaling readiness to tighten further if inflation does not improve. Meanwhile, the Bank of Japan is expected to hike interest rates to 1.25% on September 18 and then to 1.75% in the second quarter of 2027 due to persistent price pressures and yen weakness. U.S. inflation readings will be closely watched for clues on the Federal Reserve’s next policy move amid concerns that inflation remains sticky, complicating the central bank’s decision.
Traders now price a roughly 60% chance of a Federal Reserve rate hike this month after Friday’s stronger-than-expected nonfarm payrolls report. Elsewhere, the New Zealand dollar was 0.2% stronger at $0.5848, while the Australian dollar was flat at $0.7215. China's offshore yuan was flat at 6.705 per dollar, hovering near its strongest level in nearly four years due to rising energy costs.
Source: CNBC
