Dollar Gains Strength on Warsh Comments, Yen Under Pressure

The dollar strengthened after Federal Reserve Chair Kevin Warsh said the Fed would 'have work to do' if policymakers failed to gain confidence that inflation was returning to its 2% target.

Warsh's comments pushed the market-implied probability of a September rate hike to around 57%, while U.S. Treasury yields climbed to a more than one-month high near 4.33%. This has given the dollar fresh support after it spent much of August under pressure.

The escalation in oil prices, which rose about 2.7% to $90.51 a barrel after U.S. forces struck two Iranian launchers on Larak Island, is also adding to the dollar's support.

Meanwhile, the yen remains under pressure despite expectations that the Bank of Japan could raise rates in September. The pair again reached their highest since 1996, reflecting growing expectations for higher domestic rates.