Tokyo -

The dollar surged on Monday as investors bet on a US rate hike sooner rather than later, following a speech by Federal Reserve chief Janet Yellen.

The greenback firmed to 104.18 yen - its highest level since January - from 103.87 yen in New York on Friday.

The euro bought $1.3199 and 137.51 yen, compared with $1.3241 and 137.60 yen in New York.

Investors picked up the dollar after Yellen discussed slack seen in the US jobs market while acknowledging improvements in recent US indicators.

Her address on Friday at the annual Jackson Hole conference was seen as a signal of her commitment to the Fed's current timeline for raising interest rates beginning in the second half of next year, rather than earlier as some analysts and policy makers would like.

Still, the dollar swung upward as market players believed that her comment came out less dovish than expected, while many analysts also assessed the speech as being “balanced”.

Market participants speculate that the Fed could increase rates sooner than expected, should consumer prices and wages rise amid calls from the inflation hawks, said Junichi Ishikawa, market analyst at IG Securities.

“Her comments at Jackson Hole were balanced, and took into consideration the positions of the more hawkish members of the Fed,” he told Dow Jones Newswires.

Credit Agricole said it expected a possible brief “pause” in coming days for the dollar's general appreciation, but the rising trend should remain.

“Overall we think the speech was a balanced assessment of the US labour market, though one can consider it a slight hawkish shift given Yellen's usual dovish stance,” said Credit Agricole in a note to clients. - Sapa-AFP