Dollar Soars to Two-Month High as Yen Falls Amid Trade Tensions

The US dollar has strengthened to a two-month high, supported by solid economic data and elevated Treasury yields. Asian currencies have weakened in response, led by the Japanese yen's decline. The yen fell around 0.3% to 157.7 per dollar after gaining on Friday following a call between Japan's Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent.

The pair rose 0.2% to 101.12, with the dollar holding near its highest level since August. The currency is on track for a roughly 1.7% gain in September, its strongest monthly performance since June. Markets are pricing a 65% chance of another Federal Reserve rate hike at the end of October.

The yen has remained under pressure despite the Bank of Japan's recent rate increase. Markets question whether policymakers are moving quickly enough to close the interest-rate gap with other major economies.