Dollar holds gains, yen slips as Mideast energy shock deepens

"The safe-haven U.S. dollar gained on risk-aversion flows, helped ⁠by higher energy prices that have lifted the chance of a Fed hike next week to 70%," said Tony Sycamore, market ​analyst at IG in Sydney. Energy prices extended gains into a sixth day, with Brent crude futures rising 1.2% to $108.96 a barrel ​as trading resumed in Asia.

Both major benchmarks breached the $100 mark earlier this week, with WTI futures surging across the threshold on Thursday for the first time since May 21 after Iran-aligned Houthis seized control of Yemen's port city of Mocha and advanced down the Red Sea coast to strategic islands.

Against the yen, ​the U.S. dollar was as much as 0.1% firmer at 154.615 yen, while the euro strengthened by a similar magnitude to ​as much as 179.49 yen after the European Central Bank hiked interest rates on Thursday for the second time this year.

But the Japanese currency regained ‌some strength ⁠after data released on Friday showed wholesale inflation rose 7.6% in August from a year earlier, bolstering the case for a rate hike this month. The Australian dollar was flat at $0.7160, while its kiwi counterpart was up 0.1% at $0.5805.

Both the euro and the British pound were level against the dollar at $1.1613 and $1.3510, respectively. PRESSURE BUILDS ON FEDERAL RESERVEMarkets are awaiting the release of U.S. CPI data later on ​Friday, one of the last major economic ​data points released before the ⁠Federal Reserve meets next week.

Fed funds futures are pricing an implied 71.3% probability of a 25-basis-point hike at the U.S. central bank's next two-day meeting ending on September 16, compared to a ​61.2% chance in the previous trading session, 's Fed. Watch tool.

Fixed-income markets remained ​uneasy after the ⁠U.S. Treasury Department tripled the size of its long-dated bond repurchase, with a gauge of bond volatility (. MOVE) rising to its highest level in a month. The yield on U.S. 10-year government bonds was up 2.3 basis points at 4.965%.

"10-year U.S. Treasury yields are within striking distance ⁠of 5%, ​as the markets have reassessed the Fed's path higher while term premium is ​appropriately hovering near pre-GFC levels," Barclays analysts wrote. "We remain of the view that bonds are not cheap yet and catalysts for a rally do not appear imminent.

"In ​cryptocurrencies, bitcoin was down 0.8% at $76,624.32, while ether declined by a similar magnitude to $2,443.18.