Dollar Soars Amid Fed Hike Bets, Yen Holds Firm Near Seven-Month High

The US dollar has risen as investors bet on a Federal Reserve rate hike this week, prompting Asian currencies to weaken against it. The greenback is now seen with an 86% probability of a Fed rate hike at its September 16 meeting, according to CME FedWatch.

Markets expect the Fed to raise rates in response to August's acceleration in US consumer prices. This has supported the dollar and pushed Treasury yields higher, with the yield on the 10-year note reaching around 4.97%.

The Japanese yen remains near a seven-month high, however, as markets position for tighter Bank of Japan policy. Expectations of a BOJ rate hike this week have driven the yen up about 4% so far in September.