Dollar Soars on Rising Oil Prices, Fed Rate Hike Odds Firm Up

The US dollar climbed to near two-week highs on Tuesday as oil prices surged and Treasury yields rose, solidifying expectations that the Federal Reserve will hike interest rates this week.

Benchmark U.S. 10-year Treasury yields jumped by 7.2 basis points to 5.03%, their highest since 2007. Oil prices hovered near a four-month peak at $107.7 per barrel, after Yemen's Iran-aligned Houthis launched a new wave of attacks on Saudi Arabia and Gulf-Iran talks were postponed.

CME's FedWatch tool now predicts a more than 94% chance of an interest-rate increase, with markets considering it 'a near certainty' that the Federal Reserve will hike rates on Wednesday.