The US dollar climbed to a two-month peak after robust American employment figures strengthened expectations of Federal Reserve interest rate hikes later this year. This surge is pressuring global currencies amid ongoing geopolitical tensions.
Fed Rate Hike Bets Intensify
Stronger-than-expected US nonfarm payrolls data showed 172,000 new jobs added last month. This has raised the probability of at least two 25-basis-point rate hikes by the Fed in 2026.
Global Currency Pressures
The euro dropped to a two-month low against the dollar, while the British pound also weakened. Commodity currencies like the Australian and New Zealand dollars hit fresh lows.
Traders now see over 70% chance of a December Fed rate increase, up sharply from recent weeks.
Persistent energy price shocks linked to Middle East conflicts are fueling inflation concerns.c8525b
The yen traded near 160.34 per dollar, hovering close to intervention territory.
Japan’s recent currency support efforts have been largely erased by renewed dollar strength.
Analysts note the resilient US labor market despite energy challenges. This combination makes monetary tightening more likely according to economists at Capital Economics.
Bank of Japan officials are expected to consider rate hikes this month. However, escalation in regional conflicts could alter their plans.
Cryptocurrency markets showed mixed reactions with Bitcoin rebounding modestly. Ether posted stronger gains amid broader market volatility.
For emerging markets including Pakistan, a stronger dollar could increase import costs and pressure local currencies further. It may also complicate external debt servicing.
Investors remain cautious as technology stocks faced selling pressure across Asia. Broader risk sentiment stayed subdued despite some crypto recovery.