The dollar rose to a two-week high against the euro on Monday, as bets on a sharp U.S. monetary easing path faded and traders awaited this week’s U.S. jobs report.
The dollar rose to its highest level since August 21 against the yen, supported by a rise in long-term US Treasury bond yields to their highest levels since mid-August after data showed no significant decline in the inflation rate, which reduced the possibility of the Federal Reserve (the US central bank) cutting interest rates by 50 basis points on September 18.
Traders now have a 33% chance the Fed will cut rates by 50 basis points in September, versus a 67% chance of a 25-point cut. A week ago, traders were pricing in a 36% chance.
The dollar rose about 0.27% to 146.60 yen before retreating to 146.04 yen in morning trading by 05:10 GMT.
The dollar index against six major currencies rose to 101.79 points in early trading in Asia, a level not seen since August 20. The index recorded 101.72 points in the latest trading.
The euro fell to $1.1042, its lowest level since August 19, before trading at $1.1046.
Analysts said a US holiday on Monday was weighing on the dollar, but the next few days will see a flurry of economic data including Friday’s nonfarm payrolls. US Treasuries are not trading on Monday due to the holiday, but the yield on the 10-year note was at 3.9110% after rising 4.4 basis points on Friday.
The pound was steady at $1.31255, close to Friday’s low of $1.31095, its weakest since Aug. 23.
