Traders are piling in to the dollar after long weekends in both the US and the UK.

The dollar index rate, which measures the currency against most major peers, is up over 1% today.

The currency is posting strong gains against both the Euro and the Pound this morning but the biggest rise is against the Japanese Yen. The dollar is currently up almost 1% on the Yen, at ¥122.75. That’s the highest rate since 2007.

US Dollar against Yen rise

The dollar is surging

Market watchers are putting the rise down to comments from US Federal Reserve chair Janet Yellen on Friday night indicating that interest rates could rise some time this year. Yellen said that if the US economy continues to improve it would be “appropriate at some point this year” to raise rates.

This has created demand for the dollar as people want to buy in before the rate rise, which would boost their returns.

Michael Hewson, analyst for CMC Markets, said: “Despite some fairly neutral comments from Fed Chief Janet Yellen late on Friday, markets continue to price in a rate rise sometime this year, with September the next probable date on the back of a slightly stronger than expected CPI inflation number at the end of last week.”

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