Dollar Surges as Fed Hike Bets Reach Record High

The US dollar gained strength on Monday as investors increased their bets on a Federal Reserve rate hike this week, while the Japanese yen remained near a seven-month high due to expectations of tighter Bank of Japan policy.

The rise in Fed hike probabilities, now at 86% according to CME FedWatch, has supported the dollar and pushed Treasury yields higher. The dollar index was around 99.35, up 0.2%, after rising 0.12% on Friday.

The yen's strength is attributed to investor expectations of a faster BOJ tightening cycle and the possibility that Japanese investors repatriate overseas assets, pushing the currency up about 4% this month.