11.03.202612:54:38UTC+00Dollar Back to Above 99

The dollar index extended its advance to 99.1 on Wednesday, hovering near the highs reached since the outbreak of war with Iran earlier this month. Markets remain focused on the conflict and its implications for oil prices. Crude saw a brief pullback on reports that several countries are preparing to tap strategic reserves, but prices soon resumed their climb, keeping fears of an energy-driven inflation spike very much alive.

On the data front, February inflation matched expectations, with CPI remaining stable but still above the Federal Reserve’s target. The latest figures do not yet capture the full impact of the recent energy shock stemming from the conflict.

The Fed is widely expected to leave the federal funds rate unchanged at next week’s meeting. Futures markets are now pricing in only one 25-basis-point cut this year, most likely in September. In currency trading, the dollar strengthened against the euro and the yen but weakened versus the Australian dollar, as investors increase wagers that the Reserve Bank of Australia will raise interest rates next week.