Dollar Rallies as Global Currencies Weaken Ahead of U.S. Inflation Data

The dollar strengthened against major currencies, including the yen and Swiss franc, as global investors anticipate U.S. inflation data following a mixed payrolls report. This has caused uncertainties regarding a Federal Reserve rate cut next week, while ECB and BOE decisions are also in focus.

The dollar surged against the yen and other major currencies on Monday as investors braced for U.S. inflation data. This follows Friday's mixed payrolls report, which sparked uncertainties over the size of a Federal Reserve rate cut next week. The yen fell over 1% to 143.56 per dollar, down from a one-month high of 141.75 last week.

In a similar vein, the Swiss franc—also considered a safe-haven currency—declined by 0.7% to 0.8489 per dollar, retreating from an eight-month high achieved last Friday. The dollar, against a basket of currencies, gained 0.41% to 101.61.

Attention has now shifted to Wednesday's U.S. inflation report, a key factor for the Fed's September meeting. The anticipation of a 25 basis point rate cut is fully priced in by the markets, with a 25% chance for a larger, half-point move, as Fed policymakers signal readiness for potential rate cuts.

(With inputs from agencies.)