Investing.com — Asian currencies were mostly weaker on Monday, led by the Japanese yen’s slide toward recent lows, while the U.S. dollar held near a two-month high as the U.S.-Iran standoff kept oil prices elevated and investors turned to a busy week of inflation and central-bank data.
The U.S. dollar index was around 101.12, up 0.2%, putting it on track for a roughly 1.7% gain in September, which would be its strongest monthly performance since June. The USD/JPY pair rose 0.3% to 157.78.
Brent crude rose more than 1% to above $106 a barrel after U.S. President Donald Trump rejected an agreement aimed at resolving the conflict with Iran and reopening the Strait of Hormuz. The standoff has kept energy-supply risks elevated and reinforced inflation concerns.
Dollar supported by oil, yields and Fed bets
The stronger dollar has also been supported by solid U.S. economic data and elevated longer-dated Treasury yields. Markets are increasingly expecting the Federal Reserve to maintain a hawkish stance as higher energy costs threaten to keep inflation elevated.
The market’s attention now turns to the August PCE inflation report on Wednesday and September nonfarm payrolls on Friday. The PCE report is scheduled for September 30, while the September employment report is due October 2.
Markets are currently pricing about a 65% chance of another Fed rate hike at the end of October, according to CME FedWatch. That follows the Fed’s September increase to 3.75% – 4.00% and subsequent comments from officials suggesting more tightening could be needed if inflation remains persistent.
The yen slipped around 0.3% to 157.7 per dollar after gaining on Friday following a call between Japan’s Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent. The officials reaffirmed concerns about yen undervaluation and said the two countries would strengthen cooperation on the currency.
The yen has remained under pressure despite the Bank of Japan’s September rate increase, with markets questioning whether policymakers are moving quickly enough to close the interest-rate gap with other major economies.
