Kevin Buckland

TOKYO, Reuters – On Monday the dollar remained below its almost 16-month peak against major peers as traders waited for new clues about the U.S. economic situation after putting forward bets last week that the Federal Reserve would raise the interest rate in response to red-hot inflation.

The currency’s value against six peer currencies was unchanged at 95.120 on Friday. It posted the largest weekly gain since mid August and reached 95.266 for its first time since July 2020.

After Friday’s unexpected survey showing that consumers confidence plummeted to a decade lowest in early November due to high inflation, Tuesday’s U.S. retail sales data will be the main event.

Ray Attrill of National Australia Bank, Sydney’s head of FX Strategy, stated in a client letter that “it will be important for us to monitor what consumers still have in their accounts,” as sentiment readings were inconsistent with spending.

Dollar has surged since Wednesday when data revealed a sharp rise in U.S. Consumer Prices last month at the fastest annual rate since 1990. This cast doubts on Fed’s claim that prices will remain stable.

The end of last week saw the money market pricing an increase in interest rates by July, and then a likely second by November.

However, gains in the euro-weighted Dollar Index have been helped by a drop in one currency. The European Central Bank seems unlikely to adjust its relatively dovish policy settings in near future against a backdrop of slowing economies.

The euro was steady at $1.14455, a little above Friday’s $1.1433 low.

On Monday morning, Christine Lagarde, president of the ECB will address the Committee on Economic and Monetary Affairs (European Parliament)

A slight increase in the dollar to 113.965yen was seen, consolidating at 114 since Wednesday.

Sterling gained 0.8% to $1.3421 on Friday, continuing its recovery from the low of $1.3354 this year.

Australian dollars are highly sensitive and were stable at $0.7331. The Australian dollar rebounded more than a month ago from $0.7277, which it reached on Friday. It rose 0.54%.

China will release activity data Monday. Investors will be also watching comments from the virtual summit between Xi Jinping, Chinese leader and Joe Biden, U.S. President.