The euro and yen are rallying as traders have almost stopped believing the Federal Reserve will raise interest rates next month.

The common currency climbed to the strongest level since February against the dollar, while Japan’s rose to a three-month high. Investors are favoring both as slumping commodity and share prices propel the selloff in emerging-market currencies that started after China’s shock devaluation on Aug. 11. South Africa’s rand was the hardest hit of 16 major peers on Monday versus the dollar, and Australia’s Aussie reached a six-year low.

“The yen and euro are benefiting from both emerging-market risk aversion caused by China’s surprise move this month on the yuan and from falling expectations that the Fed will hike interest rates,” said Mansoor Mohi-uddin, a senior markets strategist at Royal Bank of Scotland Group Plc in Singapore.

The euro climbed 0.9 percent to $1.1485 at 9:13 a.m. in London after reaching $1.15 earlier, a level not seen since Feb. 3. The yen strengthened 1.3 percent to 120.46 per dollar. It reached 120.25, the strongest since May 19.

The Aussie dropped to 72.01 U.S. cents, the lowest since April 2009, before trading at 72.73, down 0.6 percent in the day. New Zealand’s currency slid 1.1 percent to 66.16 U.S. cents.

‘Selling Interest’

Traders are pricing in a 30 percent probability that the Fed raises rates at the September meeting, down from about 50 percent before China devalued its yuan. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.

The euro has strengthened about 4.6 percent since July, while Germany’s DAX Index has tumbled 13 percent, heading for its worst monthly drop in four years.

“We would not be surprised with selling interest emerging again closer to the session highs at $1.15, but looking more broadly, a test of $1.1550 cannot be ruled out should equities weaken further and the strong negative correlation between the euro and the DAX persists,” said Prashant Newnaha, a rates strategist at TD Securities Inc. in Singapore.

The Swiss franc, euro and yen were the best performers among 10 developed-nation peers in the past week, according to Bloomberg Correlation-Weighted Currency Indexes.