Tom Westbrook

SYDNEY, (Reuters) – The dollar opened the week supported by traders who bet that U.S. inflation data would support higher interest rates. Also, appearances by several Federal Reserve officials could help to strengthen the argument for higher rates.

On Monday, the greenback was at or near its 200-day moving median against the euro of $1.1357 after dipping Friday. The yen strengthened slightly to 115.65. This is close to the five-year peak of 116.35 last week.

A holiday in Japan helped to thin trade in Asia.

Jerome Powell, governor of the Federal Reserve, and Lael Mindard, chairperson at the Fed’s Board of Governors testify in front Senate committees about their nominations to be chairperson and vice-chair respectively.

On Wednesday, the U.S. will release its inflation data. The headline CPI is expected to rise to an alarming 7% annually.

Qi Gao, Scotiabank FX strategist said that the “the is likely to recoup some losses this week on Powell’s likely hawkish commentary et rising U.S. inflation.”

However, it was eventually that the greenback would run out steam. The index will head towards the 94 mark once the money market prices in a Fed increase in March.

Last time the dollar index was at 95.800

U.S. and Russia talks about rising tensions in Ukraine are also causing traders to be nervous. Both sides seem distant, which could make it difficult for them to reach an agreement. Failure can lead Europe into an armed conflict.

The Australian dollar fell to $0.7179 in Asia, but has been maintained below the resistance of $0.7190.

It was stable at $0.6750 [AUD/]

After a lower-than-expected U.S. headline job-creation number, the dollar saw some selling last week.

However, analysts believe that there are still good reasons to raise the unemployment rate sooner than anticipated.

Fed funds futures price a nearly 90% chance for a rate increase in March, and an even greater chance by June. U.S yields are also rising.

The sterling was marginally lower against the dollar, but rallied with bets the Bank of England will likely be hiking with the Fed.

Last week it was at $1.3590. This is near the two-month peak and very close to the two-year high of euro 1.3590. MUFG strategists believe traders in Britain are being too hawkish about their rate expectations, but they still expect sterling to hold its value.

They stated in an outlook note that they still expected two rate rises from the BOE, adding “we should keep under mild downward pressure which will result in the advancement to around the 1.4.000 level.”

The broad selling of risk assets has put pressure on cryptocurrencies at the start this year. However, they have been steady in Asia since bitcoin maintained support at $40,000 over weekend trade.

Last purchased $41,784 and ether $2,145

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Exchange rate bid prices starting at 0020 GMT

Description U.S. Close RIC Pct Change Pct High Low Bid

Previous change

Session

Euro/Dollar

$1.1354 $1.1362 -0.07% -0.13% +1.1360 +1.1347

Dollar/Yen

115.6450 115.5500 +0.00% +0.46% +115.6550 +0.0000

Euro/Yen

131.29 131.24 +0.04% +0.74% +131.3700 +131.2300

Dollar/Swiss

0.9190 0.9185 +0.00% +0.69% +0.9192 +0.0000

Sterling/Dollar

1.3591 1.3598 -0.04% +0.50% +1.3593 +1.3585

Dollar/Canadian

1.2649 1.2648 +0.00% +0.04% +1.2656 +1.2640

Aussie/Dollar

0.7179 0.7183 -0.05% -1.24% +0.7184 +0.7173

NZ

Dollar/Dollar 0.6773 0.6771 +0.05% -1.03% +0.6780 +0.6769

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