The US dollar was relatively stable on Wednesday, trading near a six-week high as persistent uncertainty surrounding the geopolitical situation in the Middle East could continue to support safe-haven demand.
Concerns over the duration of the tensions and the absence of meaningful progress toward a diplomatic resolution continued to sustain caution, while prolonged supply disruptions and elevated oil prices fuel inflation expectations.
As a result, Treasury yields remain at elevated levels, with the 30-year US Treasury yield reaching its highest level in decades and the 10-year yield climbing to fresh one-year highs, supporting the greenback. The domestic backdrop has also added support to the currency as recent labour market figures pointed to continued strength in hiring activity, while the Federal Reserve is increasingly expected to raise rates next year.
Attention now turns to the release of the FOMC minutes, which could offer greater insight into policymakers’ views on inflation and the future direction of monetary policy. At the same time, the US currency could remain exposed to any new developments in the Middle East and any change in inflation expectations.
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