Middle East conflict drives up oil prices, reigniting inflation concerns; the US dollar hits a near three-week high, while the yen falls to a one-month low

智通财经2026/09/02 03:06

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During Wednesday's Asian trading session, the US Dollar Index continued its upward trend, rising as much as 0.14% to 99.79, marking the highest level since August 14. The escalating military conflict between the United States and Iran drove up oil prices and reignited market concerns about inflation, enhancing the appeal of the US dollar as a safe-haven currency. After a sharp increase in the previous session, oil prices continued to rise, hitting a new five-week high, with Brent crude reaching as much as $96.97 per barrel.
Despite the overnight release of US July JOLTS job vacancies and the August ISM Manufacturing Index both coming in below market expectations, the currency market's bets on a Federal Reserve rate hike continued to strengthen. The CME FedWatch tool shows that the market's expectation for a September rate hike has risen to 67%, up from about 40% a week ago. A senior foreign exchange analyst at Sony Financial Group indicated that even if US economic data shows weakness, its impact could be offset by escalating tensions in the Middle East.
Federal Reserve Governor Barr stated on Tuesday that if inflation does not ease quickly, the central bank will need to raise rates. The yield on the US benchmark 10-year Treasury note edged up to 4.8%, while the yield on Japan's 10-year government bond remained at a 30-year high of 3%. Rising yields prompted investors to buy safe-haven currencies, including the US dollar, while reducing the attractiveness of high-risk assets such as stocks.
The US dollar against the Japanese yen once rose to 160.39, the highest since July 31. Although the market widely expects the Bank of Japan to raise rates this month, the yen has not received sustained support. The joint intervention by Japan and the US at the end of July managed to lift the yen from a 40-year low of 163.99, but the yen has since given back about half of the gains from that joint intervention.

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