The dollar held near ​a two-week high on Wednesday as renewed hostilities in the Middle East drove oil prices higher, reviving inflation concerns and adding upward pressure on bond ‌yields.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.11% to 99.79, its highest point since August 17. The euro was down 0.13% at $1.1577.

The currency’s appeal as a safe haven has been reinforced by rising Treasury yields and growing expectations of a Federal Reserve rate hike, even as recent economic data came in below forecasts.

The U.S. launched a barrage of airstrikes ​on Iran on Tuesday, prompting Iranian retaliation, in the most serious escalation in weeks. Oil prices rose on Wednesday, extending the previous session’s surge, with Brent futures ​up 1.15% at $95.74 a barrel and U.S. West Texas Intermediate (WTI) crude 0.85% firmer at $91.05.

“Continued vigilance is needed over the situation in the Middle ⁠East today,” said Kumiko Ishikawa, a senior FX analyst at Sony Financial Group.

Meanwhile, the New Zealand dollar weakened 0.8% against the greenback to $0.5844, its lowest point since August 13, even ​after the country’s central bank raised its official cash rate by 25 basis points to 2.75%. Analysts said market participants viewed the decision as less hawkish than expected.

“Relative to where ​markets were and what they might have expected, it doesn’t meet their expectations,” said Westpac New Zealand strategist Imre Speizer.

July JOLTS job openings and the August ISM manufacturing index, released overnight, were below market expectations, but money markets have reinforced expectations of a Federal Reserve rate hike following Chair Kevin Warsh’s speech in Jackson Hole, Wyoming, last week.

Markets are now pricing in a 68% chance of a September Fed hike, up ​from around 40% a week earlier, according to CME Group’s FedWatch tool.

“As for the U.S. data, it is worth bearing in mind that, if the figures are weak, their impact ​could be offset by heightened tensions in the Middle East,” Ishikawa said.

August’s jobs and consumer price inflation data are both due before the Fed’s next meeting on September 15 and 16. This Friday’s ‌employment report is ⁠expected to show that employers added 56,000 jobs last month, according to the median estimate of economists polled by Reuters.

Fed Governor Michael Barr said on Tuesday that if inflation does not cool quickly, it will be time for the central bank to raise interest rates.

The yield on the benchmark U.S. 10-year note rose to 4.81%, its highest since November 2023, while Japan’s benchmark 10-year yield extended its rally to 3.01% on Wednesday morning after reaching a three-decade milestone of 3% on Tuesday.

Higher yields drive investors to buy safe-haven currencies, including the U.S. dollar, while ​undermining the case for riskier assets like ​equities.

The British pound lost 0.09% to $1.3503, while ⁠the Australian dollar eased 0.04% to $0.7141.

In cryptocurrencies, bitcoin fell 0.24% to $77,242.62. Ether declined 0.51% to $2,407.74.

YEN UNDER PRESSURE

The Japanese yen weakened 0.08% against the greenback to 160.28 per dollar, its lowest level since July 31, remaining beyond the psychologically important 160-per-dollar threshold despite overwhelming expectations of a ​Bank of Japan rate hike this month.

U.S. Treasury Secretary Scott Bessent voiced strong support for “decisive” monetary steps to combat yen weakness ​in a meeting with BOJ ⁠Governor Kazuo Ueda, the Treasury Department said.

Ueda told reporters he hoped to discuss with his board at this month’s meeting whether the economy is moving in line with its forecast, and whether inflation risks were heightening.

The BOJ’s hawkish board member, Hajime Takata, said on Wednesday the bank should conduct interest rate hikes nimbly in response to inflationary pressures.

A rare joint intervention by the U.S. and Japan at ⁠the end of ​July provided short-lived relief for the fragile yen, pulling it away from the 40-year low of 163.99, but ​the currency has since surrendered around half of the gains from the joint action.

“There appears little chance of another round of actual co-ordinated intervention until there is some de-escalation in the Strait of Hormuz that takes heat ​out of the oil price,” said Tony Sycamore, a market analyst at IG, in a note.

The federal government has raised the prices of petrol and high-speed diesel, effective midnight for a one-day pricing cycle.

The Petroleum Division statement stated that the fuel price has been hiked by Rs1.08 per litre, from Rs342.79 to Rs343.87 per litre.

High-speed diesel (HSD) price increased by 51 paisas per litre to Rs370.92 per litre.

The latest revision follows a day after the government had reviewed the petroleum prices for the new pricing period commencing September 1. The previous rates were Rs342.79 per litre for petrol and Rs370.41 per litre for high-speed diesel.

The increased petrol price will now see consumers paying Rs343.87 for each litre they buy, while diesel consumers will have to shell out Rs370.92 a litre.

The Pakistan Stock Exchange (PSX) on Wednesday saw a bearish trend amid growing tensions between the US and Iran after the latest exchange of strikes.

The KISE index shed 1,289.43 points or 0.73 percent to 175,177.56 points from previous close of 176,466.99.

The market traded between an intraday high of 175,519.88 and a low of 174,701.13.

The trading volume was 57,010,307 and the overall market value was listed at 3,482,780,690.

Asian equities tumbled on Wednesday as a bond market-led selloff on global markets spilt into the region following intensified attacks by the U.S. on Iran pushed oil prices higher.

MSCI’s broadest index of Asia-Pacific equities outside Japan (.MISX00000PUS) slumped 1.5% with South Korea’s KOSPI (.KS11) skidding more than 3% and the Nikkei 225 (.N225) off 2.6%. S&P 500 e-mini futures dipped 0.1%.

Brent crude futures rose for a second day in Asia trade, gaining 1.3% to $95.91 a barrel after the U.S. launched a round of airstrikes on Iran on Tuesday, which pushed oil prices to a five-week high earlier.