The dollar extended its advance for a second straight session as crude oil kept climbing and equities pulled back, with rising energy prices continuing to lift inflation expectations and support the greenback.
Crude prices pushed more than a percent higher during the session, building on Monday’s sharper surge, while stocks slipped as some of the recent risk-on enthusiasm cooled. The combination gave the dollar a modest but consistent boost, continuing a pattern that’s now held for two consecutive trading days: oil higher, yields firmer, dollar gaining ground.
This marks a notable shift from the tone just a week earlier, when a weak jobs report sent the dollar tumbling to a seven-week low. Since then, a mix of firmer Treasury yields and now a sustained run higher in energy prices has helped the currency claw back a meaningful portion of that decline, even as the underlying labor market concerns that triggered the initial selloff haven’t gone away.
With Wednesday’s inflation report still looming as the week’s headline event, the current oil-driven dollar strength could either get reinforced or challenged depending on what that data shows. A hot CPI print paired with already-elevated energy costs would build a stronger case for the dollar’s recent recovery to continue; a cooler reading could complicate it.
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