The dollar index climbed above 102 on Friday and was poised for a third straight weekly advance, underpinned by solid US economic performance, elevated Treasury yields, and escalating geopolitical tensions in the Middle East. Treasury yields rose this week to their highest levels since 2002, further widening the dollar’s interest-rate advantage over other major currencies.
Investors also weighed evidence of a resilient US labor market ahead of the September employment report. Minneapolis Fed President Neel Kashkari noted that it is still uncertain how high interest rates will need to go to bring inflation under control, stressing that the Federal Reserve must take whatever steps are necessary to return inflation to its target.
At the same time, oil prices moved higher as the US considered sending an additional aircraft carrier and 10,000 troops to the Middle East, heightening concerns about potential disruptions to regional energy supplies and the risk of renewed inflationary pressures.
