Dollar Gains Amid Oil Surge, Fed Hike Bets, Yields Rise to 5%

The dollar rose to a two-week high as oil prices surged, lifting Treasury yields and reinforcing expectations of a Fed interest rate hike this week. The FedWatch tool prices a 93% chance of an increase, which would be the first in over three years. The euro and sterling weakened against the dollar, while the yen pulled away from a seven-month high ahead of an expected Bank of Japan rate hike on Friday. Oil prices reached $107 a barrel after Yemen's Iran-aligned Houthis attacked Saudi Arabia, driving benchmark 10-year Treasury yields to breach the key psychological level of 5%.