The dollar index rose 0.29% on Monday, supported by higher Treasury yields and a 5% surge in WTI crude oil prices that raised inflation expectations and the prospect of further Federal Reserve tightening. Cleveland Fed President Beth Hammack said the current interest rate is not meaningfully restricting the economy and that "some number" of rate hikes would probably be needed to bring down inflation, while markets priced a 52% chance of a 25-basis-point increase at the September 15-16 FOMC meeting. The euro fell 0.15% against the dollar as the oil spike weighed on the energy-importing Eurozone economy, though losses were limited after the Eurozone Sentix investor confidence index rose to a six-month high of 0.9 in August. The yen tumbled more than 0.94% to a one-week low, pressured by higher crude prices, rising Treasury yields, and a 2% rally in the Nikkei Stock Index to a two-week high, while a hawkish summary of the July 30-31 Bank of Japan meeting showed one board member flagged the risk that rising inflation could accelerate the pace of rate hikes. Gold settled 0.46% higher and silver rallied 2.79% to a seven-week high, drawing support from last Friday's weaker-than-expected US payrolls data and news that China's central bank added 640,000 ounces to its gold reserves in July, the largest increase in more than two and a half years.
