Dollar Strengthens Amid Global Sovereign Debt Rout

The US dollar continues to strengthen, reaching two-week highs as global sovereign debt rout pushes benchmark yields to multi-year peaks.

This move has cemented market expectations that the Federal Reserve will resume monetary tightening in September.

According to money market swaps, there is now a 74% probability of a 25-basis-point Fed rate increase at the Sept. 17 policy gathering, up from 34% prior to Federal Reserve Chair Kevin Warsh's hawkish keynote at Jackson Hole.

This has left lower-yielding peer currencies vulnerable to widening interest rate differentials.