Dollar Surges Amid Middle East Conflict and Rate Hike Expectations

The US dollar rose across the board on Monday due to the ongoing conflict in the Middle East, which pushed up oil prices and led investors towards the safe-haven currency. The U.S. dollar index, tracking the currency against six major peers, reached its highest since September 2 at 99.735 before settling at 0.3% higher at 99.41.

The euro fell to a one-month low of $1.153 and was last down 0.2%, while the British pound fell 0.2% to $1.3512. Brent crude rose as much as 5% to $109.8 a barrel before paring gains to trade at $105.61.

Central banks are under pressure, with investors increasingly convinced that the U.S. Fed will hike interest rates on Wednesday in response to the jump in energy prices. Markets pointed to a roughly 90% chance of a rate hike, up from around 60% a week ago.