The dollar index climbed toward 99.3 on Friday, its highest level in about a month, as concerns about war-driven inflation intensified. The situation in the Middle East remains fragile and far from resolved, with Trump calling the opening line of Iran’s latest proposal “unacceptable.” Oil prices continued to rise, with the Strait of Hormuz still closed.
At the same time, the summit between President Trump and Chinese President Xi concluded without any major agreements, including any sign that Beijing would help address the conflict. Both CPI and PPI data released this week indicated that the energy shock is pushing US inflation higher. Traders are now fully pricing in one Federal Reserve rate hike for March next year, and see more than a 50% probability of another increase before the end of 2026.
The greenback strengthened broadly, posting its largest gains against the Australian dollar and the British pound. For the week, the dollar is up nearly 1%.
