Dollar at one-week high on Middle East uncertainty, hot US inflation

By Lucy Raitano and Jiaxing Li

HONG KONG, May 13 (Reuters) - The dollar held adjacent a one-week precocious connected Wednesday connected renewed uncertainty successful the Middle East and arsenic traders digested a hotter-than-expected U.S. ostentation people and intimately watched the yen.

The euro slipped 0.2% to $1.171675 and ‌sterling traded 0.2% little astatine $1.3524 .

The risk-sensitive Australian dollar was unchanged astatine $0.72410 and the New Zealand dollar traded down 0.3% astatine $0.59345 .

The U.S. dollar index, which tracks ‌the greenback against a handbasket of six large currencies, was up 0.1% astatine 98.449, its highest level since May 5.

Meanwhile, lipid prices roseate 0.2% and stayed firmly supra the $100 mark, with Brent ​crude futures past trading astatine $108 a barrel.

Hopes for a bid woody successful the Middle East person dwindled aft President Donald Trump said a ceasefire with Iran was "on beingness support" aft Tehran rejected a U.S. connection to extremity the war.

Trump said connected Tuesday that helium does not deliberation helium volition request Beijing's assistance to extremity the warfare with Iran up of his gathering with Chinese President Xi Jinping aboriginal this week.

"What's going connected successful the Strait of Hormuz... that's the main operator successful the background," ‌said Tommy von Brömsen, FX strategist astatine Handelsbanken successful Stockholm.

"The ⁠longer this goes connected the much cardinal banks are going to find themselves successful a much hard situation."

U.S. CPI HOT

The U.S. user terms scale roseate 3.8% successful the 12 months done April, the biggest year-on-year summation since May 2023, arsenic the lipid ⁠shock triggered by the warfare pushed prices higher.

Yields connected the U.S. two-year note, which typically moves successful measurement with Federal Reserve involvement complaint expectations, and the benchmark 10-year enactment hovered adjacent seven-week highs; they past traded astatine 3.9854% and 4.4629%, respectively.

Markets person mostly priced retired immoderate accidental of a complaint chopped from the Fed this year, portion expectations for ​a ​hike of astatine slightest 25 ground points astatine the cardinal bank's December gathering roseate to ​35%, according to CME's FedWatch Tool.

Commerzbank FX analysts said the ‌extent of the leap successful CPI was astonishing and absorbing up of Fed seat Jerome Powell's word ending connected Friday. On Tuesday, the U.S. Senate confirmed Kevin Warsh to a 14-year word arsenic Federal Reserve governor, an important measurement towards him succeeding Powell.

"The large question successful the coming months volition beryllium whether Warsh tin stitchery capable allies wrong the FOMC to propulsion done aboriginal complaint cuts," the Commerzbank analysts said successful a report.

Traders are awaiting U.S. shaper terms information owed aboriginal successful the league for a further work connected the U.S. economy.