Ammon News - The dollar held near a one-week high on Wednesday as risk sentiment soured after a hot U.S. inflation reading sent Treasury yields higher, and oil inched ​up on renewed Middle East uncertainty.

The euro stood at $1.1735 and the sterling traded at $1.3532 , ‌both down roughly 0.05% against the greenback in early Asia trades.

The U.S. dollar index , which tracks the greenback against a basket of six major currencies, was steady at 98.335, near the strongest level in a week.

"I think it's ​a less positive risk tone, effectively. The U.S. dollar has been tracking risk sentiment ​very closely throughout the war," said Ray Attrill, head of FX strategy at ⁠National Australia Bank.

A lack of positive momentum in the equity market is also a culprit, he ​added.

The U.S. consumer price index (CPI) rose 3.8% in the 12 months through April, the biggest year-on-year increase ​since May 2023, as the oil shock triggered by the war with Iran pushed prices higher.

Meanwhile, hopes of a peace deal in the Middle East dwindled after U.S. President Donald Trump said a ceasefire with Iran was "on life ​support" after Tehran rejected a U.S. proposal to end the war and stuck to a list ​of demands that Trump called "garbage."

Oil prices settled higher, with Brent crude futures last traded near $108 a barrel.

The U.S. two-year ‌note ⁠yield, which typically moves in step with Federal Reserve interest rate expectations, rose to 3.9956%. The yield on benchmark U.S. 10-year notes climbed to 4.4688%.

Markets have largely priced out any chance of a rate cut from the Fed this year, while expectations for a hike of at least 25 basis ​points at the central ​bank's December meeting rose ⁠to 35%, according to CME's FedWatch Tool.

The Australian dollar fetched $0.72365 , and the New Zealand dollar traded at $0.5954 , both largely flat.

The Japanese yen was largely ​steady at 157.715, after a sudden move stronger on Tuesday had stoked ​speculation of a "rate ⁠check" by authorities, which is often a precursor to currency intervention.

U.S. Treasury Secretary Scott Bessent said the U.S. and Japan believe that excess volatility in the currency market is undesirable, comments that were seen as ⁠offering some ​support to Tokyo's recent round of intervention to prop up ​the yen.

Elsewhere, China's yuan traded around 6.79 per dollar, near its strongest since February 2023, as markets looked ahead to this ​week's meeting between Trump and Chinese President Xi Jinping in Beijing.

Reuters