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(This story changes dateline to OTTAWA, Aug 7 from TOKYO, Aug 8)
By Kevin Buckland
OTTAWA The dollar extended it best rally against the yen since mid-June on Monday, buoyed by higher Treasury yields after blockbuster U.S. jobs data lifted expectations for more aggressive Federal Reserve policy tightening.
The greenback was last 0.31% higher at 135.42 yen, and earlier rose to 135.585 yen, its highest since July 28, after surging 1.57% in the previous session, its biggest single-day gain since June 17.
The dollar index, which measures the currency against six counterparts, stood at 106.77, from a Friday peak of 106.93, also the strongest since July 28.
Traders currently see a 73.5% probability the Fed continues the pace of 75 basis-point interest-rate increases for its next policy decision on Sept. 21, from about 41% before surprisingly strong payrolls data on Friday raised worries that wage growth would fuel inflationary pressures.
