Dollar up on Rate Rise as Markets Slow ahead of Thanksgiving

The dollar rose against the yen and emerging Asian currencies on Monday, boosted by a looming U.S. interest rate hike, but analysts said liquidity will be thin ahead of the Thanksgiving holiday.

Mounting expectations the U.S. will raise interest rates for the first time in almost a decade next month have driven the greenback higher.

San Francisco Fed president John Williams fueled bets for a rate rise this weekend when he said there was a "strong case" for a hike in December, following bullish remarks from his colleague from St Louis on Friday.

"The markets are still quite euphoric on the increased prospects of Fed rate hike in December, which prompted bullish USD positioning," said Bernard Aw, market strategist at IG in Singapore.

"With the futures market pricing in a close to 70 percent odds of a December rate action, USD strength is likely to persist," he added, predicting the greenback will continue to gain against Asian currencies.

Singapore bank UOB said in a note that with the United States celebrating Thanksgiving Day on Thursday, trading is likely to be muted this week.

Japanese markets were closed on Monday.

At 0530 GMT, the dollar was trading at 123.21 yen, from 122.85 yen on Friday, while the euro bought $1.0616, down from $1.0641 in New York.

The single currency plunged on Friday after European Central Bank chief Mario Draghi pledged fresh action to boost eurozone inflation.

The dollar was slightly higher across the board against the Singapore dollar, Korean won, Taiwan dollar, Indonesian rupiah, Malaysian ringgit, Philippine peso and Thai baht.

Minutes from the Federal Reserve last week showed its policymakers are satisfied the U.S. economy is strong enough to withstand a rate hike next month.