Dollar hits two-month peak

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LONDON: The dollar hit a two-month peak against a basket of currencies and a one-month high against the yen on Monday, after Federal Reserve Chair Janet Yellen fanned expectations for U.S. rate hikes in the near term.  Political developments in Tokyo were also supporting the dollar against the yen.

Japanese Prime Minister Shinzo Abe said he would delay a sales tax hike scheduled for next April by two and a half years, a senior ruling party official said on Monday.

Japan is also seen compiling a supplementary budget to boost the sputtering economy, a move which is widely expected to be followed by further monetary easing by the Bank of Japan, all of which was keeping the yen on the back foot amid lower volumes in Europe.

London markets are shut for a public holiday while the U.S. is closed for Memorial Day.  The dollar rose above 111.00 yen for the first time since late April, reaching 111.39 yen in early European trading, up nearly 1 percent on the day.

For the month, the dollar is on track for its best show since late 2014 against the yen.

Against a basket of currencies, the dollar was up 0.35 percent at 95.879, while the euro struggled near 2-1/2 month lows of $1.1097 hit in the Asian session.