BY COMFORT OGBONNA
The U.S. dollar traded largely sideways in early Asian trading on Wednesday as investors looked past renewed attacks on commercial shipping in key Middle Eastern waterways and turned their attention to upcoming U.S. inflation data for clues about the Federal Reserve’s next interest-rate decision.
The dollar’s relative stability came despite growing concerns over disruptions to global shipping and energy supplies following attacks involving vessels in strategically important waterways in the region.
The Japanese yen was little changed at 159.335 per dollar, remaining near its weakest levels of the month despite recent coordinated efforts by U.S. and Japanese authorities to support the currency. The euro was also steady at $1.1537, while the British pound held at $1.3503.
The Australian dollar was unchanged at $0.7064.
The New Zealand dollar slipped 0.1% to $0.5876 after Prime Minister Christopher Luxon said he had secured the support of lawmakers from his ruling party in a confidence vote. The vote followed speculation over his leadership ahead of a general election.
The focus for currency markets remains firmly on U.S. inflation data due later Wednesday. Investors are looking for evidence that inflation is continuing to moderate, which could influence expectations for the Federal Reserve’s interest-rate policy.
The latest data come after a weaker-than-expected U.S. jobs report last week raised questions about the strength of the labor market and increased uncertainty over the central bank’s policy direction.
Markets are also assessing comments from Federal Reserve officials as they attempt to determine whether policymakers are becoming more concerned about inflation or slowing employment growth.
ING analysts said inflation could continue to ease through the remainder of 2026 if oil prices remain contained and the Strait of Hormuz eventually reopens. They said financial markets were already pricing in a relatively mild inflation outcome.
The dollar index, which measures the U.S. currency against six major currencies, was up 0.1% at 99.858.
Oil prices rose modestly as Asian trading resumed, reflecting renewed concerns about supply disruptions. Brent crude futures were up 0.8% at $89.61 a barrel following attacks and military activity involving commercial vessels near important shipping routes.
The developments have increased uncertainty in global energy markets because the region includes some of the world’s most important routes for transporting oil and other commodities.
A prolonged disruption could push energy prices higher, potentially increasing inflationary pressures in economies that rely heavily on imported fuel. Higher oil prices could also complicate efforts by central banks to lower interest rates.
Federal Reserve Bank of Chicago President Austan Goolsbee said Tuesday that policymakers were more concerned about inflation remaining too high than about weakness in the labor market. His comments added to uncertainty over the central bank’s next move.
Investors remain closely divided over whether the Federal Reserve will keep interest rates unchanged at its September meeting or raise them.
Interest-rate futures currently imply roughly a 52% probability that policymakers will leave rates unchanged at the meeting ending Sept. 16, compared with a 48% probability of a quarter-percentage-point increase.
The closely balanced expectations highlight the importance of the upcoming inflation data. A stronger-than-expected reading could reinforce expectations for higher interest rates for longer and potentially support the dollar. A weaker reading could strengthen expectations that policymakers may have greater room to ease monetary policy.
The outlook is further complicated by geopolitical developments. A sustained increase in oil prices caused by disruptions to shipping could make it harder for inflation to decline even if domestic price pressures continue to moderate.
Currency traders are therefore watching both economic data and developments in the Middle East as they assess the outlook for the dollar and other major currencies.
In cryptocurrency markets, bitcoin and ether were little changed. Bitcoin traded at about $63,708.64, while ether stood near $1,881.91.
With U.S. inflation figures due later in the day, investors are expected to remain cautious as they assess whether price pressures are easing sufficiently to influence the Federal Reserve’s policy path.
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