Dollar Rises Amid Middle East Conflict and Fed Rate Hike Expectations

The US dollar rose across the board on Monday as conflict in the Middle East pushed up oil prices and investors turned to safe-haven currencies. The U.S. dollar index, which tracks the currency against six major peers, was last up almost 0.6% after touching its highest level since September 2.

The euro fell to a one-month low of $1.153 and was down 0.5%, while the British pound fell 0.5% to $1.3474. A jump in oil prices unnerved investors, sending global bond yields back towards multi-year highs. Brent crude was up 3% to $108 a barrel.

Market analysts say the key question for markets this week is whether the US Federal Reserve will hike interest rates on Wednesday in response to the jump in energy prices and underlying inflation. Money markets pointed to a roughly 90% chance of a rate hike, up from around 60% a week ago.