The Japanese yen was pinned near its best level since February on Wednesday, leaving the dollar on the ‌defensive as traders grappled with oil prices heading toward $100 a barrel amid an expanding war in the Middle East.

Iranian-backed Houthis in Yemen attacked several Saudi cities, drawing a U.S. partner further into a battle that has dragged on for more than six months, as U.S. forces struck multiple Iranian oil tankers and Iran threatened a U.S. station in Jordan.

Brent crude futures rose by more than 1.48% to $99.37 a barrel, weighing on global markets ahead of a U.S. inflation data on Friday that will set the stage for central bank meetings next week in the U.S. and Japan.

The currency market nudged the dollar down a touch in response, though some analysts said that was due to the yen’s swift rally over the past week.

The euro held constant at $1.1631 while the pound was last bought at $1.3546. ​The dollar index, measuring the U.S. currency against a basket of six major rivals, was at 98.15, near its lowest level in nearly two weeks.

OCBC strategists said the current increase keeps Fed policy implications from higher energy prices in focus, especially after last week’s robust U.S. payrolls report reignited expectations of another rate hike. “Higher oil and rates should help limit USD fall for now but we anticipate a more dramatic move will await confirmation from the impending inflation data,” they said in a note.

The yen has been under focus after its 4% surge in September that has altered the math for the popular carry trade in which investors borrow in yen at a low cost and invest in other currencies and assets yielding better interest.

The yen was stronger at 153.65 per dollar, close to the seven-month peak of 152.89 struck on Tuesday. The surge has been broad-based with the Japanese currency strengthening against the euro and sterling as well as favorite carry-trade targets such as the Mexican peso and Turkish lira.

The increase has been fueled by expectations of quicker tightening by the Bank of Japan and the return of offshore cash by Japanese investors and pressure from Washington for a higher yen.

Traders broadly expect the BOJ to hike rates by 25 basis points at its September 17-18 meeting but the rise will rest on if Governor Kazuo Ueda delivers hawkish comments and the wild card will be the Federal Reserve.Aninda Mitra, head of Asia macro and investment strategy at BNY Investments, stated “Much will depend on how the market prices in the Fed’s path of interest rates too.We estimate the Yen’s “fair value” to be in the 140’s and a further move to that area should not be a total surprise following what has clearly been an overshoot to the side of excessive Yen weakness.”

The Australian dollar gained 0.12% to $0.7225, just below a four-month high set in the previous session, in Pacific trade. The New Zealand dollar was up 0.16% at $0.5862.

Sources said that if the federal capital is made an independent unit, proposals have been created to introduce a new local tax in Islamabad and the revenue collected will be used on basic services and administrative structure within the city.

Early recommendations are for levies to fund hospitals, schools, colleges and other educational institutions, welfare operations and the administrative framework in Islamabad, sources added. The suggestions are likely to be addressed with the International Monetary Fund (IMF) team during the upcoming economic review while the new tax could be adopted in the budget of the next fiscal year.

No definitive estimate of amount to be collected has yet been prepared. Sources claimed the planned tax was aimed at generating fiscal room for Islamabad, considering the infrastructure requirements of the city.

The fifth review under the Extended Fund Facility (EFF) is scheduled to be reviewed in Pakistan’s next round of talks with the IMF. The fifth review is also listed as a program milestone in the IMF program materials.

Sources said that Federal Board of Revenue (FBR) will prepare tax suggestions in the first instance. These will be laid before the subcommittee created to study the question of taxation in connection with the infrastructure necessary to make of Islamabad an independent unit.

After approval by the relevant subcommittee, the recommendations will be referred to a committee chaired by the minister for planning. After approval there, the plans would be sent to Prime Minister Shehbaz Sharif and then completed after approval by the IMF.

The Ministry of Finance has asked all relevant ministries and agencies to collect the necessary data and reports in preparation for the economic review talks with the IMF.

The relevant ministries will brief the IMF delegation on structural benchmarks and targets for economic reform, sources added. Also reforms in the energy sector will continue to be an important element of the talks and targets relating to circular debt in the electricity and gas industry are also expected to be discussed.

Sources said that if the talks between Pakistan and the IMF were successful it would open the way for the delivery of the fifth tranche under the present loan arrangement. Upon successful completion of the evaluation, the total estimated distribution would be $1.2 billion. Under the fifth tranche, Pakistan is scheduled to receive roughly $1 billion, while another $200 million could be granted to mitigate losses caused by climate change.

According to reports, the planned roadmap also include a new mechanism for the utilization of municipal taxes and distribution of resources. The administrative structure is being put in place and financial affairs are being coordinated with the international lender’s recommendations likely to be part of the effort to make the tax system more effective.

U.S. President Donald Trump said on Monday that Canadian private aircraft maker Bombardier (BBDb.TO) would no longer be allowed to sell its jets in the United States unless it began manufacturing in the nation.STOP SELLING BOMBARDIER IN THE UNITED STATES! Their items aren’t good enough!” Trump wrote in a post on Truth Social.“If they want our Market, they have to build here, and stop using America as a piggy bank,” he stated.

The post came as a trade battle between Washington and Ottawa escalated, part of the near-global tariff wall in Trump’s second term that has garnered concerns from numerous US trading partners.

Canada will impose a series of retaliatory tariffs on the US on Tuesday.

The White House did not immediately respond to a request for comment on how Trump would implement the action or what steps he would take to prevent deliveries of Bombardier jets, which have been cleared by the U.S. Federal Aviation Administration.

The planemaker’s jets also meet the United States-Mexico-Canada trade accord that Trump helped implement.

U.S. aerospace analyst Richard Aboulafia said he did not think any business jet buyers would cancel Bombardier contracts, and he did not see how Trump could block them from being sold. Aboulafia, managing director of AeroDynamic Advisory, an aircraft management consulting firm, said most Bombardier private planes are powered by U.S.-made engines from Honeywell aircraft (HONA.O) and GE Aerospace (GE.N).

Aerospace has generally escaped untouched from Trump’s trade battle, with the flow of parts and planes not yet affected by taxes. U.S. aerospace and military has a $109.2 billion trade surplus and exports are up 25% on an annual basis in 2025, according to U.S. trade group Aerospace Industries Association.

Aerospace is as intertwined as the U.S. auto industry, which depends on parts from its northern neighbor.

Bombardier, a rival of U.S. business jet maker Gulfstream Aerospace (GD.N) based in Montreal, with 3,500 American employees, a U.S. footprint of 2,800 suppliers and factories and service centers around the country. The company is also opening its sixth U.S. service center and builds wings for its flagship Global 8000 plane in Texas.

Bombardier stated in a statement Monday nite that it spends more than $2.5 billion annually with U.S. suppliers.The United States is “a place where we will continue to invest in for our people, our customers and the communities we operate in across the country,” the business said.

Bombardier also has a defense subsidiary with a Kansas plant that prepares Canadian-made planes for special-mission missions. Bombardier’s customers operate a fleet of 5,100 aircraft, about half of which are in the U.S. In January, Trump announced the U.S. was decertifying Bombardier Global Express business jets and threatening 50 percent import taxes on all aircraft made in Canada until the country’s regulator certified a number of planes produced by Gulfstream. Neither happened, but during the next month Canada certified a few of Gulfstream planes.

Bombardier said in July that its quarterly sales rose 6 per cent to $2.15 billion from the same three months a year ago, supported by robust demand for aftermarket services.