The dollar notched an 11-month top on the yen on Thursday as oil price advances while Asian stocks were pressured as borrowing costs rose at home.

Oil prices have reached four-year peaks as the market focused on upcoming U.S. sanctions on Iran while shrugging off the year’s largest weekly build in U.S. crude stockpiles.

Brent wad 86.11 dollars a barrel on Thursday, while U.S. crude wad 76.25 dollars.

Higher U.S. yields are anything but favourable for emerging markets as they tend to draw away much-needed foreign funds while pressuring local currencies.

Bond prices fell across Asia and long-term Japanese yields reached ground not visited since early 2016, a market tightening not warranted by domestic economic conditions.

MSCI’s broadest index of Asia-Pacific shares outside Japan skidded 1.1 per cent in response, with South Korea, the Philippines, Indonesia and Taiwan all down.

Even the Nikkei eased 0.2 per cent, as rising yields offset the boost to exporters from a weaker yen.

The dollar had taken off after an influential survey of the U.S. services sector showed activity at its strongest since August 1997.

This sparked speculation that the payrolls report on Friday could also surprise.

A Fed hike in December is now put at an 8 in 10 chance, while investors lifted expectations for how high rates may eventually go.

Fed fund futures for December 2019 sank to a contract low of 97.12, implying a rate of 2.88 per cent.

At the start of this year, they had looked for only 2.1 per cent.

Financials were also aided by signs Italy would cut its budget deficit and lower its debt, easing concerns that had pressured global stock markets.

The Dow rose 0.2 percent, while the S&P 500 gained 0.07 per cent and the Nasdaq 0.32 per cent.

The groundswell of economic optimism swept the U.S. dollar to a six-week high on a basket of currencies and it was last trading up at 96.085.

In Asia, the Indian rupee and Indonesian rupiah have been under heavy fire, in part because both countries are being squeezed by the soaring cost of imported oil.

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