The dollar was buoyed against its two main rivals, the yen and euro on Tuesday, lifted by a rise in Treasury yields after report from Washington that U.S. President Donald Trump was favoring a policy hawk as the next head of the Federal Reserve.
Yields rose from two-week lows as Trump is said to be favouring Stanford economist John Taylor, who is viewed as more hawkish than Chair Janet Yellen.
EUR/USD slipped to 1.1754 overnight following a quarter percent drop the previous day, while USD/JPY rose to 112.30 bouncing from a three-week low of 111.65. Disappointing inflation data at the end of last week had weighed on the greenback.
Meanwhile, the US has called for "calm" after Iraqi government forces seized the northern city of Kirkuk and key installations from Kurdish control, BBC reported. Crude oil futures jumped as Iraqi soldiers moved into the oil-rich region three weeks after the Kurdistan Region held an independence referendum.
Traders are concerned that the conflict will disrupt exports from Iraq, the second biggest oil producer in the Organization of Petroleum Exporting Countries. WTI trades above 52 USD/barrel on Nymex at the time of writing while Brent trades higher than 58 USD/barrel on ICE.
UK inflation is expected to show improvement in the September print. Market analysts anticipate a 3.0 percent change in the price of goods and services purchased by consumers. Data due at 1030 CET. UK inflation is expected to hit a five-year high this week, outstripping growth in pay packets and putting renewed pressure on the Bank of England to raise interest rates. GBP/USD trades around 1.3275 ahead of the figures.
