Dollar climbs on renewed Middle East attacks, Hormuz closure

U.S. and Iranian forces exchanged heavy missile and drone assaults at the weekend, with Tehran targeting U.S. facilities in states across the Gulf on Sunday and saying it had again closed the vital Strait of Hormuz shipping route.

Oil prices rose in Asian trade, with Brent crude futures LCOc1 up 4.1% at $79.11 a barrel.

"After the flare-up into the end of last week which continued over the weekend, the dollar has responded, and the crude oil price has been the driver," said Tony Sycamore, market analyst at IG in Sydney. "This reinflames concerns that if the energy prices rise from here, we could start to see rate hikes pulled forward."

Fed funds futures are pricing an implied 50.9% probability of two or more rate hikes by the time of the U.S. central bank's December meeting, up from a 47.6% chance on Friday, according to the CME Group's FedWatch tool.