Dollar Slumps Amid Rising Hike Bets, Yen Soars

The US dollar struggled to gain ground on Monday despite an increase in expectations for a Federal Reserve rate hike. The greenback fell 0.07% to 99.09 against a basket of currencies, close to its recent low of 98.558.

Traders now price in a roughly 57% chance that the Fed will raise rates this month after Friday's blowout US jobs report. However, markets are cautious, and a hot CPI print would seal a September hike, while a cooler reading could strengthen the case for a hold.

The European Central Bank is expected to lift rates to 2.75% on Thursday, driven by high oil prices. The Bank of Japan also faces pressure to raise rates, with futures implying a 75% chance of another hike to 3.0% by December.

Japanese Prime Minister Sanae Takaichi's economic adviser projected a BOJ hike this month, pushing the yen up more than 0.2% to 155.88 per dollar. Eric Roberts, global head of research and chief strategist at Standard Chartered, said that persistent yen strength could signal a change in asset allocation.