Dollar Holds Gains, Yen Slips as Middle‑East Energy Shock Deepens
The U.S. dollar stayed near weekly highs while the yen weakened, as renewed fears of Middle‑East supply disruptions lifted oil prices and global bond yields, prompting expectations of a Fed rate hike.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher oil prices help Oil & Gas but a stronger dollar and rising global yields pressure banks, power and overall market sentiment – avoid buying.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- BanksNegatively affected
- PowerNegatively affected
- MarketsNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Banks, Power, Markets — Negative · Do not buy. PSX tickers: OGDC, PPL. Higher oil prices help Oil & Gas but a stronger dollar and rising global yields pressure banks, power and overall market sentiment – avoid buying.
Full Story
Open on Business Recorder## Currency Moves
The U.S. dollar index traded at 99.081, holding steady after a 0.3% rise on Thursday, its strongest level since September 7. The greenback firmed against the yen, reaching 154.615 yen, while the euro rose to 179.49 yen after the European Central Bank’s second rate hike this year. The Australian dollar was flat at $0.7160 and the New Zealand kiwi edged up to $0.5805.
## Energy Market Shock
Oil prices extended gains for a sixth consecutive day. Brent crude futures climbed 1.2% to $108.96 a barrel, and WTI futures broke the $100 barrier after the Houthi rebels seized Yemen’s port city of Mocha and moved along the Red Sea coast. The escalation has revived concerns over Middle‑East oil supply disruptions.
## Inflation and Rate Outlook
U.S. producer‑price data showed a 0.4% rise in August, matching expectations and reflecting higher energy costs. Market analyst Tony Sycamore (IG, Sydney) said the safe‑haven dollar benefited from risk‑aversion flows and the heightened probability of a Fed hike, now estimated at 70% for the upcoming meeting.
## Bond Market Reaction
U.S. Treasury yields rose, with the 10‑year note up 2.3 basis points to 4.965%, and bond‑volatility gauges hitting a one‑month high after the Treasury tripled its long‑dated repurchase operations. Barclays analysts warned that 10‑year yields are approaching 5% and that bonds remain expensive.
## Upcoming Data
Investors await U.S. CPI figures later on Friday, one of the final major data releases before the Federal Reserve’s two‑day policy meeting ending on September 16. Fed‑funds futures now price a 71.3% chance of a 25‑basis‑point hike, up from 61.2% the previous session.
## Other Markets
Cryptocurrencies slipped, with Bitcoin down 0.8% at $76,624 and Ether falling to $2,443.
## Implications for Pakistan
A stronger dollar and higher global yields can pressure the Pakistani rupee and increase borrowing costs for local companies, especially those with dollar‑denominated debt. Conversely, rising oil prices may boost earnings for oil‑and‑gas firms listed on the PSX.