The dollar index was trading a touch lower by 0.06 per cent at 99.00, still on course for a 1.4 per cent gain this week that would be the most since November 2024

The U.S. dollar held broadly steady ​in early Asian trade on Friday and was poised for its sharpest ‌weekly ​gain in more than a year as the escalating war in the Middle East drove demand for safe-haven assets.

The euro and yen remained on the back foot as the crisis drove oil prices ever higher, spurring inflation risks in countries dependent on energy imports and upending expectations for policy by central banks.

If the Middle Eastern conflict continues at its ‌current intensity, it’s likely to bring sustained higher inflation, a stronger U.S. dollar, and a vastly reduced chance of Fed rate cuts, IG market analyst Tony Sycamore wrote in a note.

The dollar index, ‌which measures the U.S. currency against a range of currencies, was trading a touch lower by 0.06 per cent at 99.00, still on course for a 1.4 per cent gain this week that would be the most since November 2024. The euro was little changed at $1.1612, while the yen tacked on 0.06 per cent to 157.5 per dollar. Sterling was almost steady, up just 0.04 per cent at $1.3361.

The U.S. dollar was one of a handful of winners in a volatile few sessions that have dragged stocks, bonds and, at times, even safe-haven precious metals lower. The spike in energy prices from the ⁠Middle East war has stoked fears of a resurgence in inflation, with overnight index swaps (OIS) showing shifts in rate outlooks for central banks.

The Australian dollar firmed 0.16 per cent ‌versus the U.S. dollar to $0.7017. The kiwi gained 0.15 per cent to $0.5903.