The dollar was on the front foot on Monday, supported by a strong run of economic data out of the United States that traders bet will keep the Federal Reserve on its monetary policy tightening path for longer than initially expected.
The greenback advanced broadly in early Asia trade, sending sterling 0.12% lower to $1.2028 and the Aussie falling 0.18% to $0.6866.
Against the Japanese yen, the dollar rose 0.14% to 134.32.
Trading is likely to be thin on Monday, with U.S. markets closed for Presidents’ Day.
A slew of data out of the world’s largest economy in recent weeks pointing to a still-tight labour market, sticky inflation, robust retail sales growth and higher monthly producer prices, have raised market expectations that the U.S. central bank has more to do in taming inflation, and that interest rates would have to go higher.
“For the week ahead, the dollar can track higher given the recent run of economic data which supports the narrative of higher-for-longer interest rates,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).
Markets are now expecting the Fed funds rate to peak just under 5.3% by July.
Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled that interest rates will need to go higher in order to successfully quash inflation.
This report’s information was first seen on ZAWYA; to read more, click this link.
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