Dollar Holds Gains as Fed Hike Bets Rise

The dollar held near a one-week high as rising oil prices and bond yields, driven by escalating Middle East tensions, intensified inflation concerns ahead of the U.S. consumer-price report. Stronger-than-expected producer-price data lifted market expectations for a 25-basis-point Federal Reserve rate increase at next week’s meeting to roughly 70%, making the CPI release a potentially decisive signal. Oil remained above $100 a barrel despite a modest Friday pullback, with analysts warning that prolonged energy disruptions could keep inflation elevated and support demand for the dollar as a defensive asset. The euro weakened modestly after the European Central Bank raised its deposit rate to 2.5% without providing clear guidance on further moves, while the pound gained after stronger-than-expected British growth. The dollar also advanced against the yen despite recent coordinated U.S.-Japan intervention, underscoring continued pressure on the Japanese currency from low domestic interest rates and global carry-trade dynamics.