The dollar hits its highest level in five weeks because the Fed is acting aggressively before Jackson Hole.

On Monday, the U.S. dollar index hit a new high for the first time in five weeks. This happened after another Fed official said that aggressive monetary tightening is likely to continue before this week's important Jackson Hole symposium.

The euro fell to its lowest level in five weeks after Russia said it would stop sending gas to Europe through the Nord Stream 1 pipeline for three days at the end of this month. This will make the energy crisis in the region even worse.

China's currency, the yuan, fell to its lowest level in almost two years after the central bank cut key lending rates. This was the latest in a series of monetary easing measures meant to help the economy recover from COVID-19 crackdowns and a property crisis.

The U.S. dollar index, which compares the dollar to six other currencies, including the euro, went up to 108.26 for the first time since July 15 and was last up 0.074% at 108.23.

That comes after the market went up by 2.33% last week, which was its best weekly gain since April 2020. At the same time, Fed officials have been saying over and over that more needs to be done to bring down inflation, which has been high for decades.

On Friday, Thomas Barkin, the president of the Richmond Fed, said that the "urge" among central bankers was to raise rates faster and more quickly at the beginning.

"Fed speakers have been emphasizing that more rate hikes are on the way because the fight against inflation isn't over yet," which shook the markets before Jackson Hole in August.

Rodrigo Catril, a senior FX strategist at National Australia Bank, wrote in a client note that a lot of people expect Fed Chair Jerome Powell to say that tightening is "still a long way from the end" on March 25-27.

Money markets show that there is a 47.5% chance of another huge 75 basis point rate hike on September 21, and a 52.5% chance of a half-point rise.

In a poll by Reuters, most economists are leaning toward a 50 basis-point increase because there are more signs of a recession.

In Tokyo trading on Monday, benchmark 10-year U.S. Treasury yields went above 3% for the first time since July 21.

The dollar went as high as 137.40 yen against Japan's currency, which is very sensitive to U.S. yields. This was the highest it had been since July 27.

In onshore trading, the dollar went as high as 6.8308 yuan for the first time since September 2020. This happened after the People's Bank of China cut the prime rates for one-year and five-year loans, which was expected by most people.

Last week, it surprised everyone by lowering the cost of borrowing money.

The dollar hit 6.8520 against the offshore yuan, which was also the best level since September 2020.

The euro fell to $1.0026 for the first time since July 15 and then went down 0.13 percent to $1.0027.

Sterling went down by 0.23 percent to $1.1805, which is close to Friday's five-week low of $1.17925.