The asylum dollar held close to a 14-month high against the euro on Thursday as rising energy prices heightened fears that inflation could limit economic growth as well as prompt the Federal Reserve to act faster to normalize policy.

 

The U.S. currency remained stable at $1.1558 per euro after strengthening to $1.1529 on Wednesday, the first time since July last year.

 

The dollar index, which measures the dollar against a basket of six competitors, has changed little since Wednesday to 94.188, after nearly 0.5% growth over the past two sessions. Last week, the index hit an annual high of 94.504.

 

The Japanese yen, another safe haven, has largely remained at 111.375 per dollar, roughly halfway through its range over the past week and a half.

 

Overnight, crude oil rose to a seven-year high before catching its breath from the recent booming growth, while natural gas jumped to a record peak in Europe and coal prices from major exporters also hit all-time highs.

 

"All the talk on (market) platforms, on social media and in broad markets was around Nat Gas, and it was deafening," wrote Chris Weston, head of research at pepperstone broker in Melbourne. a client note called "OMGas".

 

"Traders feared that the risks of stagflation were mounting and wondered how central banks were coping with the stagflation caused by the supply shock?"

 

Investors also remained on the strain over negotiations over the U.S. debt ceiling, even as the top Republican in the U.S. Senate, Mitch McConnell, said his party would extend the debt ceiling until December, averting a historic default with dire economic consequences.

 

The Federal Reserve, which has so far largely argued that inflationary pressures will prove temporary, said it would likely begin to cut its monthly bond purchases as early as November before interest rate hikes followed.

 

Economists expect further improvement in the labor market, with the consensus forecast suggesting that 473,000 jobs were created in September, a Reuters poll showed.

 

The number of U.S. private sector jobs rose more than expected in September as Covid-19 infections began to weaken, allowing Americans to travel, visit restaurants and re-engage in other activities that require more contact, the ADP National Employment Report showed Wednesday.

 

Meanwhile, Bitcoin, the world's largest cryptocurrency by market value, hovered around the nearly five-month high of $55,800 reached on Wednesday and last traded around $54,881.