Dollar Struggles Amid Rising Rate Hike Expectations

The US dollar struggled to find direction on Monday despite rising expectations of a Federal Reserve rate hike in September. A strong employment report triggered a 57% probability of a September hike, but this has had limited impact on the dollar's value due to increased inflation pressures elsewhere.

Rising oil prices and Middle East tensions have strengthened the case for monetary tightening by other major central banks, reducing the dollar's yield advantage. The European Central Bank is widely expected to raise rates to 2.75% this week, while futures imply a 75% probability of another increase to 3% by December.

The Japanese yen gained 0.1% to 156.01 per dollar after an economic adviser to Prime Minister Sanae Takaichi projected a BOJ rate hike this month. Bitcoin was little changed around $80,000, last trading at $79,841.85, as some investors diversified away from the dollar.