The Indian rupee closed nearly unchanged on Tuesday after hitting a two-month low earlier in the session as crude oil prices continued to dictate the currency's momentum while likely central bank ?intervention limited weakness. The rupee had declined 0.2% to 96.1475 in early trading but trimmed losses to close nearly flat at 95.98 as Brent oil prices turned lower on the day, after touching a peak of nearly $108 per barrel. Dollar sales by state-run banks, most likely on behalf of the Reserve Bank of India, helped limit the local currency's fall early in the day and sentiment improved when crude prices cooled. The focus is squarely on oil and a break below $100 per barrel would take the rupee to 95.40-50 per dollar while current levels should keep it closer to 96. The dollar rose against major currencies on Tuesday as investors ?positioned for economic data that could offer clues on the Federal Reserve's interest-rate path, with Treasury yields hovering near multi-year highs. The greenback remained near multi-month highs as the benchmark 10-year Treasury yield settled above 5%. The dollar index rose 0.2% to 101.39, hitting its ?highest level since July 28. he pound fell against the dollar on Tuesday, caught up in the global trend, but strengthened marginally against the euro as traders awaited a speech by British Prime ?Minister Andy Burnham at his governing Labour Party's annual conference. The big picture in currency markets is one of a steadily strengthening dollar, and sterling was not immune. The pound lost 0.2% to $1.3226, close to a three-month low, as elevated US bond yields and oil ?prices combined to boost the dollar. But the pound did manage to strengthen against the euro for a third day, with the common currency last down 0.1% at 85.72 pence. The euro was down 0.30% to $1.13365, a three-month low, as the currency strategies in the face of a global energy shock and growing political risk in Europe. The dollar strengthened 0.2% to 0.834 against the Swiss franc , trading at a 16-month high. The Japanese yen held steady against the greenback at 157.55 per dollar with markets weighing recent warning of probable coordinated intervention from Tokyo and Washington.
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The fortunes of the euro, trading not far off its lowest levels of the year against the dollar, are in the grip of a global energy shock and growing political risk in Europe. The euro was heading towards $1.20 in August, but has fallen around 2% this month to two-month lows of just below $1.14 . While a US rate rise that has restored the Fed's inflation-fighting credentials has bolstered the dollar, the euro's outlook has also been muddied by politics and a renewed rise in oil prices that could hurt an economy that has held up better than expected. Australia's central bank raised its cash rate to a 15-year high of 4.60% on Tuesday in its fourth hike of the year, saying inflation was too high and it was prepared to hike further if needed. Wrapping up its September policy meeting, the Reserve Bank of Australia board voted unanimously to lift rates by 25 basis points, bringing the tightening this year to a full percentage point. The board said some of the upside risks to inflation were materialising with energy costs high and productivity weak at home. Oil prices and bond yields rose in an uncomfortable combination for stocks on Tuesday, as investors braced for an era where short-term borrowing costs settle at their highest levels in years. Australia raised its cash rate to a 15-year high, as expected, and market participants have bet on it going higher still. The benchmark 10-year US Treasury yield spiked to a 19-year high above 5.27% on Monday for a rise of nearly 50 basis points through September. Yields rise when bond prices fall and the monthly selloff is the heaviest for two years. Sovereign yields are an anchor for global markets, a reference price for investing in riskier stocks and a benchmark for mortgages and corporate borrowing. Higher rates mean pressure on government, corporate and household budgets.......