The dollar gained ground on Monday, bolstered by robust economic statistics from the United States, which traders believe will keep the Federal Reserve on a path of monetary policy tightening for longer than previously anticipated.
Early Asia activity was marked by a broad dollar increase, with the pound down 0.12% to $1.2028 and the Australian dollar falling 0.18% to $0.6800.
The dollar increased 0.14% against the Japanese yen to 134.32.
The U.S. markets will be closed on Monday in observance of Presidents’ Day.
Recent data from the world’s largest economy indicating a still-tight labor market, persistent inflation, robust retail sales growth, and higher monthly producer prices have boosted market views that the U.S. central bank must do more to tame inflation and that interest rates must rise.
The markets currently anticipate that the Fed funds rate will peak just below 5.3% in July.
Fed officials’ hawkish views have also supported the U.S. dollar, as they indicate that interest rates will need to rise to effectively combat inflation.
Similarly, two policymakers from the European Central Bank (ECB) stated on Friday that interest rates in the euro zone still have some room to rise, pushing up market pricing for the ECB’s maximum rate.
This, however, had little effect on the euro, which was last trading 0.16% lower at $1.0677.