Oil tops $100 as dollar posts biggest two-week gain

Brent crude futures touched $105 per barrel on Thursday. This price level is the highest point in recent weeks. The U.S. dollar responded with a 0.4% gain. This is the largest intraday move since August 28. All Group-of-10 currencies traded lower against the greenback. The Bloomberg Dollar Spot Index reflected this broad strength. The move was driven by new inflation data and rising energy costs.

U.S. core Producer Price Index rose 0.2% month-over-month. July’s figure was revised up to 0.3%. Headline PPI climbed 5.4% year-over-year. This is the fastest pace in three months. Energy prices were a key driver of this increase. The market now expects the Federal Reserve to resume rate hikes. Bets on further tightening surged during the session. The data confirmed that inflationary pressures remain elevated.

Treasury yields hit multi-year highs

U.S. Treasury yields rose by 6 to 8 basis points across the curve. The 30-year yield reached its highest level since 2007. The 2-year yield broke above 4.5% for the first time since 2024. The U.S. Treasury re-auctioned $22 billion in 30-year bonds. The awarded yield was approximately 5.35%. This is the highest auction result since 2001. The Treasury plans to buy back up to $6 billion in bonds. This is triple the original $2 billion size.

The European Central Bank raised rates by 25 basis points. The deposit rate now stands at 2.5%. This is the second hike since the U.S.-Iran conflict began. The ECB cited inflation risks from the Middle East conflict. Germany’s 10-year bund yield rose 8 basis points to 3.44%. The U.K. 2-year gilt yield climbed more than 10 basis points. Global bond markets faced broad selling pressure. Investors reacted to the combined impact of oil and policy shifts.

G10 currencies face broad pressure

The euro declined against the dollar. It fell less than other peers due to the ECB hike. The Bank of Japan maintained hawkish rhetoric recently. However, the yen fell about 0.5% on Thursday. This erased earlier gains from U.S. Treasury Secretary support. Rising Treasury yields put renewed pressure on the yen. The dollar’s strength was supported by rate expectations. No G10 currency managed to hold positive ground. The broad retreat reflected the scale of the dollar rally.

GN markets/fx (en-US) reported the data from the U.S. Bureau of Labor Statistics. The energy market shows no signs of cooling yet. The U.S.-Iran conflict continues to drive prices higher. Treasury yields remain elevated across major economies. The expanded buyback program has not reversed the selloff. The market is pricing in a prolonged period of high rates. Inflation risks remain the central concern for policymakers. The dollar’s dominance in the G10 basket is currently unchallenged.