Dollar Up, Euro Near Three-Week High As Central Banks Continue To Strike Belligerent Tone By

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By Gina Lee – The dollar was up on Monday morning in Asia, with the euro nearly hitting a three-week high the previous week. Investors continued to digest the European Central Bank’s (ECB) hawkish turn while saying further near-term gains are less likely as the looming US Federal Reserve interest rate supported the dollar.

The trailing greenback against a basket of other currencies edged up 0.07% to 95.545 at 11:03 p.m. ET (4:03 a.m. GMT).

The pair edged up 0.07% to 115.28.

The pair edged up 0.04% to 0.7078 as Australia released earlier in the day. The pair edged down 0.05% to 0.6616.

The pair fell 0.44% to 6.3328, showing the value was 51.4 in January.

The pair edged down 0.02% to 1.3527.

Investors are now awaiting US inflation data, including the , due Thursday. A strong reading could raise bets on a March 2022 Fed interest rate hike.

The euro was trading at $1.1451, not far from the high of $1.4183 hit the previous week and close to levels last seen in mid-January 2022. The dollar, meanwhile, received a late boost at the end of a bruising week thanks to the strength of employment in the United States. report.

The report showed they were at 467,000 in January and down 4%. The safe-haven US currency could also see further gains, according to some investors.

“We see the risk of a bigger dollar rally in the near term if interest rate markets price a greater likelihood of a 50 basis point hike in March. But the previous week’s hawkish turn to ECB President Christine Lagarde suggests that any rise in the dollar will be capped,” Joe Capurso, head of international economics at Commonwealth Bank of Australia (OTC:) said in a note.

In the short term, “with little fresh news from Europe this week likely to further boost market prices for ECB hikes, further euro upside is unlikely,” the note added.

Markets are pricing a one-in-three chance that the Fed could start raising interest rates in March, with a reasonable chance that rates will hit 1.5% by the end of 2022.

Two-year US yields were higher and near a two-year high of 1.32% on Monday, while benchmark 10-year yields were at 1.9049%.

Investors now await speeches from the Fed, ECB, Bank of England, Reserve Bank of Australia (RBA) and Bank of Canada throughout the week. Klaas Knot, president of the Dutch central bank and member of the ECB’s governing council, said on Sunday that he expects a rise in the fourth quarter of 2022.

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