Dollar falls 0.07% as yen gains and rate-hike bets rise

  • Dollar weakened 0.07% against major currencies despite increased Federal Reserve hike expectations.
  • 57% chance of a Federal Reserve rate increase was priced for this month.
  • Yen gains followed a Japanese adviser’s projection of a Bank of Japan hike.

The dollar slipped 0.07% to 99.09 against a basket of currencies on Monday, struggling to hold gains following Friday’s stronger-than-expected U.S. jobs report. Traders priced in a roughly 57% chance of a Federal Reserve rate increase this month, with Friday’s inflation data seen as decisive. Middle East tensions and elevated oil prices have increased expectations that central banks will tighten policy together, limiting the dollar’s potential upside. The European Central Bank is widely expected to raise rates to 2.75% on Thursday, while markets see a 75% chance of another move to 3.0% by December. The yen rose more than 0.2% to 155.88 per dollar after a Japanese Prime Minister Sanae Takaichi economic adviser projected a Bank of Japan hike this month. Bitcoin steadied above $80,000 as investors continued diversifying away from the dollar.

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