Currency markets subdued as oil shock lifts global yields; ECB, US inflation eyed
Rising oil prices above $100 and a jump in global bond yields have cooled currency trading, while investors await US inflation data and ECB policy decisions.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher oil prices and rising global yields increase inflation risk, likely pressuring Oil & Gas and Banking stocks; avoid buying.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- BanksNegatively affected
- EconomyNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Banks, Economy — Negative · Do not buy. PSX tickers: OGDC, PPL. Higher oil prices and rising global yields increase inflation risk, likely pressuring Oil & Gas and Banking stocks; avoid buying.
Full Story
Open on Business Recorder## Global currency market snapshot
Currency trading remained cautious on Thursday as markets digested a fresh surge in oil prices and a rise in global sovereign bond yields. The yen’s rally paused, and the dollar index slipped slightly from a three‑week low.
## Oil price shock and geopolitical backdrop
Brent crude futures stayed firmly above the $100 per barrel mark after breaching that level on Wednesday. The price lift follows intensified attacks on shipping by Iran and the United States – the most significant wave of maritime strikes since the start of the conflict – raising fears of deeper disruptions to Middle‑East energy supplies.
## Bond yields and inflation pressure
Higher oil prices fed fresh inflation concerns, pushing benchmark 10‑year U.S. Treasury yields to their highest levels since 2023. A disappointing buy‑back programme of longer‑dated bonds added to the upward pressure on yields.
## Currency movements
The greenback found marginal relief, leaving the euro at $1.1633 and the pound at 1.3547. The Japanese yen, after a strong rally to seven‑month highs, slipped to around 153.70 per dollar as traders await a possible Bank of Japan rate hike next week. The dollar index was last quoted at 98.81.
## Upcoming macro data and central‑bank actions
All eyes are now on U.S. inflation releases – producer‑price data later Thursday and the CPI on Friday – the final major data points before the Federal Reserve’s policy meeting on 15‑16 September. Analysts note that persistent inflation could force the Fed to tighten further, which would raise government borrowing costs.
The European Central Bank is expected to raise rates again on Thursday, signalling readiness for additional tightening if inflation does not improve. The Bank of Japan is also projected to lift its policy rate to 1.25% on 18 September and to 1.75% in early 2027.
## Regional currency notes
The New Zealand dollar edged 0.2% higher to $0.5848, while the Australian dollar held steady at $0.7215. China’s offshore yuan remained flat at 6.705 per dollar, near its strongest level in four years after domestic producer‑ and consumer‑price data showed inflationary pressure from higher energy costs.