U.S. Dollar Advances As Concerns Of Rate Hike Due To Possible Higher Inflation Increase

(RTTNews) - The U.S. Dollar value edged higher on Friday as crude oil prices continued to surge for the second day supported by concerns of a potential U.S.-Iran war. Oil-driven inflation worries have led to expectations of an interest rate hike in the U.S.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 101.81, up by 0.21 (or 0.21%).

While against the Euro, the USD was trading at 1.119, up by 0.18%, against the GBP, the USD was trading at 1.337, up by 0.24%.

Against the USD, the Japanese Yen was trading at 156.831, down by 0.05%, the Swiss Franc was trading at 0.825, down by 0.60%; and the Canadian Dollar was trading at 1.401, down by 0.02%.

Against one unit of Australian Dollar, the USD was trading at 0.703, down by 0.23%.

Crude oil prices skyrocketed today adding to yesterday's surge.

Middle East tensions due to escalation in Houthi attacks on Saudi Arabia and reports of a possible military campaign on Iran by the U.S. continued to impact the currency market today.

The U.S.-Iran war is set to enter the ninth month by next week.

In the recent weeks, the U.S. halted its military attacks on Iran and Iran refrained from striking the U.S. bases situated in neighboring nations.

However, leaders of both nations continued to engage in exchange of verbal rhetoric.

Iran's Islamic Revolutionary Guards Corps announced that Iran is capable of defending against any attack.

The IRGC also added that it would unveil a sophisticated weapon to combat any U.S. attack, which it termed as the "Father Of All Bombs".

Yesterday, the New York Times reported that the U.S. and Israel have planned for a joint military operation against Iran's nuclear installations, energy infrastructures, and missile and drone capabilities, after the U.S. mid-term elections in November.

Since the news broke out, concerns of a deep and intense conflict in the U.S. and the eventual disruption to oil and energy supply from the arab to the rest of the nations have jumped.

Oil-linked inflation threats are returning to the markets. Economists are of the view that major central banks could be forced to hike interest rates.

U.S. President Donald Trump messaged via Truth Social that Iran is cooking up stories to drive up oil prices ahead of the U.S. elections.

In an interview with Financial Times, U.S. Ambassador to the United Nations Mike Waltz speculated that the war with Iran could last one more year but added that the Iranian regime could come to the negotiating table before that.

Today, before leaving to Florida, Trump repeated that the U.S. is in a position to end the war with Iran quickly or let the nation wither under sanctions.

Elsewhere in the Middle East, following the Houthi attacks on Saudi Arabia's airports and other energy infrastructures, oil major Aramco instructed its staff to evacuate Dhahran headquarters.

Houthis claimed attacking Saudi Arabia's defense headquarters in Riyadh.

The U.S. Federal Reserve is slated to announce the interest rate next week.

The odds on a rate hike by the Fed were hovering at 7.20% yesterday.

Currently, according to the CME Group's FedWatch Tool, investors are betting on a 9.40% chance of a 25-basis-point interest rate hike at the upcoming meeting of the Fed on October 27-28 and the bets on the rates being held at the current level stand at 90.60%.

On the economic front, data released by S&P Global revealed that the composite Purchasing Managers Index in the U.S. decreased to 57.60 in October from 58.40 in September.

While the manufacturing PMI edged up to 56.00 in October from 55.90 in September, services PMI edged down to 57.9 in October 2026 from 58.8 in September.

The University of Michigan's consumer sentiment index was revised higher to 48.00 in late October, up from a preliminary estimate of 46.30 but remained at its lowest level in five months.

In Japan, the annual inflation rate accelerated to 2.10% in September from 1.90% in the previous two months, marking the highest level since December 2025. On a month-on-month basis, the consumer prices showed no growth from a month earlier in September, following a 0.10% gain in the previous period.

The core consumer price index (which excludes fresh food but includes energy) increased 2.10% year-on-year in September 2026, following a 1.70% rise in August.