Dollar set for first monthly gain since September on higher U.S. rate expectations
The U.S. dollar resumed its rally on Tuesday after dipping against sterling and the euro a day earlier, putting it back on track for its first monthly gain since September.
The greenback’s rally gathered momentum in recent weeks as upbeat economic data led to mounting expectations that the U.S. Federal Reserve will have to raise interest rates more than initially expected.
The dollar index , which measures the currency against a basket of peers, was flat at 104.64, but was still set for a February gain of 2.6%, its first monthly increase since September.
“The dollar has made its rebound – fully justified – on the strength of the January numbers that came through in February, and the repricing for the Fed,” said Ray Attrill, head of FX strategy at National Australia Bank, referring to the strong run of U.S. economic data.
Investors now expecting the Fed funds rate to peak just above 5.4% by September, compared with an anticipated peak of around 4.70 at the start of the month.
“I think we’re sort of lurching from one major data print to another… The next move in the dollar is really a function of how the February data starts to play out in March,” Atrill said.
This report’s information was first seen on REUTERS; to read more, click this link.