Global currencies trade in narrow ranges as markets focus on inflation and oil

The US Dollar traded in a narrow range at the start of the week, while major currency pairs showed limited movement.

Meanwhile, oil prices advanced amid the absence of any signs of de-escalation in the Middle East crisis.

The US Dollar (USD) Index fluctuated below the 101.00 level after posting a two-day rebound at the end of the previous week.

At the same time, US stock index futures traded little changed, indicating a cautious start to the trading week.

Oil prices gain on geopolitical concerns

Oil prices moved higher at the beginning of the week as the ongoing crisis in the Middle East continued to support energy markets.

There were no indications of a de-escalation in the conflict, keeping investors focused on potential supply risks.

During Asian trading hours, the People's Bank of China (PBOC) announced that it kept its benchmark Loan Prime Rates (LPRs) unchanged.

The central bank left the one-year Loan Prime Rate at 3.00%, while the five-year reference rate remained at 3.50%.

Following the announcement, the Australian Dollar showed a limited reaction.

The AUD/USD pair traded relatively quietly on Monday and edged marginally higher during the session, remaining slightly below the 0.7000 mark.

New Zealand inflation data in focus

Investors are also awaiting New Zealand's quarterly Consumer Price Index (CPI) data, which Statistics New Zealand is scheduled to release during the early Asian trading session on Tuesday.

Ahead of the inflation release, the New Zealand Dollar remained firm.

The NZD/USD pair held on to modest gains and traded near the 0.5850 level during the European morning session on Monday.

The euro and pound remain stable

The Euro traded with limited direction against the US Dollar at the start of the week.

The EUR/USD pair remained broadly flat during the day after opening with a small bearish gap.

It traded slightly below the 1.1450 level as investors refrained from taking significant positions.

The British Pound also posted modest gains against the US Dollar.

Market attention remained on political developments in the United Kingdom, with Andy Burnham set to become the country's seventh Prime Minister in a decade later in the day.

Burnham is expected to appoint Shabana Mahmood as finance minister, with Mahmood widely viewed as someone who would support fiscal conservatism.

Against this backdrop, the GBP/USD pair held on to small gains and traded above the 1.3450 level at the start of the European session.

Indian rupee weakens as oil rises

The Indian Rupee opened the week on a weaker footing against the US Dollar.

The USD/INR pair climbed to around 96.46, supported by a fresh rise in oil prices and continued foreign fund outflows from the Indian equity market.

The combination of higher energy prices and sustained selling by foreign investors weighed on the Indian currency at the start of the week.

Overall, currency markets remained largely range-bound as investors assessed geopolitical developments, monitored central bank decisions, and awaited key inflation data from Canada and New Zealand for further direction.