The US dollar index rose on Thursday, moving near weekly highs as renewed escalation in the Middle East weakened hopes for a near-term peace agreement and reinforced demand for the currency.
Reports of heightened tensions and geopolitical uncertainty revived concerns over prolonged disruptions to global energy markets.
Oil prices rebounded as expectations for a swift diplomatic resolution receded, reinforcing inflation concerns that have increasingly influenced markets in recent weeks.
As a result, Treasury yields moved higher across the curve, supported by the view that persistent energy-driven price pressures could force the Federal Reserve to maintain a cautious stance for longer.
Attention now turns to the release of PCE inflation and GDP data later today. These figures could inject some volatility into both currency and bond markets. They could push both markets up, particularly if they reinforce the perception that inflation remains persistent while economic activity continues to grow despite higher energy prices and geopolitical uncertainty.
