U.S. Dollar Advances Amid Oil-Linked Inflation Concerns, PPI Data Release

(RTTNews) - The U.S. Dollar value edged higher as oil prices surged after U.S. President Donald Trump expressed that the war with Iran may go on until November. In addition, investors parsed stronger-than-expected Producer Prices Index released today.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 99.09, up by 0.32 (or 0.32%).

Against the Euro, the USD was trading at 1.161, up by 0.20%.

As widely expected by investors, the European Central Bank raised its key interest rates by 25 bps at its September meeting, marking its second hike since the US-Iran war began. The main refinancing rate was raised to 2.65%, while the deposit rate increased to 2.5%.

ECB President Christine Lagarde warned that the Middle East conflict as well as the recent developments in Russia-Ukraine war will keep headline inflation more than the bank's 2.00% target for an extended period.

Against the GBP, the USD was trading at 1.351, up by 0.28%.

Against the USD, the Japanese Yen was trading at 154.470, down by 0.63%, the Swiss Franc was trading at 0.813, down by 0.40%; and the Canadian Dollar was trading at 1.384, down by 0.22%.

Against one unit of Australian Dollar, the USD was trading at 0.716, up by 0.84%.

Yesterday, while heading to Texas for his party's first mid-term election convention, U.S. President Donald Trump remarked that the U.S.-Iran war will end soon after the mid-term U.S. elections in November as he felt that Iran would not be able to hold any longer than that.

Trump added that right after the election, oil prices would tumble.

Trump criticized Iran of desperately attempting to influence the upcoming elections as it wants a party that supports its nuclear programs to have control in Congress.

Though Trump conceded that talks with Iran could happen, he observed that the U.S. was not keenly looking forward to it.

Oil-linked inflationary concerns have triggered expectations of higher interest rates.

The data released by the U.S. Bureau of Labor Statistics revealed that on a month-on-month basis, the Producer Prices in the U.S. increased 0.40% in August and on a year-on-year basis, it increased 5.40%.

Data from U.S. Department of Labor revealed that on a month-on-month basis, the core producer prices (which excludes food and energy goods), increased 0.20% from the previous month in August. For the same month, on a year-on-year basis, the core PPI inched up to 4.60%.

On the economic front, the U.S. Labor Department's data showed that for the first week of September, the number of people claiming unemployment benefits moved lower by 1,000 from the previous month to 206,000 in line with market expectations.

Continuing jobless claims decreased to 1,774,000 for the week ending August 29 from 1,775,000 of the previous week.

Data from the National Association of Realtors showed that existing home sales decreased 2.00% month-over-month in August, a third consecutive monthly decline, following a 1.70% fall in July.

Currently, investors are betting on a 71.10% chance of a 25-basis-point rate-hike at the upcoming meeting of the U.S. Federal Reserve on September 15-16 while the odds on rates being held at the current level stand at 28.90%, according to the CME Group's FedWatch Tool.

Market participants are awaiting tomorrow's Consumer Price Index report for additional clues on the Fed's policy path.