Peter Nurse

Investing.com – The dollar pushed higher in early European trading Monday, continuing the previous session’s gains after strong inflation numbers cemented the case for tapering at this week’s Federal Reserve meeting.

The Dollar Index, which measures the greenback’s performance against six other currencies at 3:05 am ET (805 GMT), traded 0.1% lower at 94.243. It was just below Friday’s high of 94.302 and a new record.

This follows the release of data Friday which showed the Fed’s favorite inflation measure, , rising at an annual 4.4% in September, the fastest since 1991.

This week’s central bank meeting is a two day affair. It will conclude on Wednesday and it is expected to announce that the Fed has halted its stimulus program. However, market expectation has grown that the Fed will increase interest rates sooner then previously planned because of continued inflationary pressures.

Goldman Sachs, a prominent investment bank (NYSE:), has responded to the pandemic by moving its prediction forward by one year to July 2022 in anticipation of the U.S.’s first interest rate increase.

“The main reason for the change in our liftoff call is that we now expect core PCE inflation to remain above 3% — and core CPI inflation above 4% — when the taper concludes,” Goldman’s chief economist, Jan Hatzius, wrote in a client note over the weekend. 

Close to the highest point since Oct. 20, 114.33 traded 0.3% lower at 114.33. He could be able to use this leverage to increase stimulus for the economy to help it recover. This would likely hurt the yen.

dropped 0.2% to 1.3659 ahead of Thursday’s , which could see the central bank lift interest rates if it judges the country’s economy to be strong enough to cope as inflation mounts.

was 0.3% lower at 0.7502, retreating from a near four-month high of 0.7555 reached last week ahead of Tuesday’s meeting of the .

The country’s central bank is under pressure to drop a commitment to keep yields on its April 2024 target bond at 0.1% as house prices soar. It decided not to defend its 0.1% target of three-year yields on the bond, which subsequently rose to more than 0.8%. 

fell 0.1% to 1.1553, only marginally above Friday’s low of 1.1535, the weakest since Oct. 13, which followed Thursday’s European Central Bank meeting.