Dollar Rising on Higher-Than-Expected U.S. Inflation, Fed Rate Hike Bets By

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By Gina Lee – The dollar was higher on Friday morning in Asia, with stronger-than-expected U.S. inflation data and hawkish comments from a Federal Reserve policymaker accelerating expectations for aggressive interest rate hikes. However, similar pressures globally have limited the gains.

The trailing greenback against a basket of other currencies rose 0.32% to 95.852 at 10:19 p.m. ET (0319 GMT).

The pair edged up 0.06% to 116.08 as Japanese markets were closed for a holiday.

The pair was down 0.27% at 0.7146 and the pair was down 0.22% at 0.6654.

The pair edged up 0.10% to 6.3604 while it edged down 0.07% to 1.3546.

US inflation data showed the consumer price index (CPI) rose 7.5% and 0.6% in January. Core CPI rose 0.6% and 6% . He also encouraged that the Fed should raise rates by 100 basis points over the next three meetings.

US Treasuries rose and the dollar hit a five-week high against the yen in a volatile overnight session. The US currency also faltered against other currencies, before broadly firming earlier in the Asian session.

“There is certainly a sense of urgency at least for some (Fed) members,” Commonwealth Bank Of Australia strategist Kim Mundy told Reuters.

“But the Fed is not the only central bank facing this inflation conundrum,” with a hawkish pivot at the European Central Bank (ECB) over the past week likely to cap dollar gains by removing a headwind for the euro, added Mundy.

The ECB will update its economic projections in March 2022, as bond markets expect an even more hawkish turn. Swap pricing also indicates a nearly 30% chance that the Bank of England will raise interest rates by 50 basis points next month.

Even central banks that have taken a more dovish approach, such as the Reserve Bank of Australia (RBA), are changing their tune. RBA Governor Philip Lowe said earlier today that if the economic recovery hits forecasts, interest rate hikes could potentially take place in 2022.

The Australian dollar is forecast for a weekly rise of nearly 1% despite dollar strength on Friday, while its New Zealand counterpart is also heading for a second consecutive weekly gain.

Meanwhile, the Bank of Japan also pledged to buy an unlimited number of 10-year bonds at 0.25% on Thursday, in response to several days of selling pressure in the Japanese bond market.

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