By Gina Lee

Investing.com – The dollar was up on Tuesday morning in Asia, with the safe-haven asset remaining near a two-week high. Increased concerns about the U.S. Federal Reserve’s monetary policy tightening faster than expected and possible conflict with Ukraine continued to grow.

By 11:23 ET (04:23 GMT), the that monitors the greenback relative to a basket other currencies had risen 0.04%, or 95.935 at 11:00 PM ET.

It fell by 0.17%, to 113.72.

It rose 0.03 to 0.7142. Data earlier in day revealed that the consumer price index increased 1.3% and 3.5% during the fourth quarter in 2021. Meanwhile, the was at –12 for December.

The higher-than-expected number boosted the case for a Reserve Bank of Australia (RBA) interest rate hike in 2022, despite the central bank’s governor Philip Lowe previously maintaining that such an eventuality was extremely unlikely.

Money markets, however, have been against the RBA’s position for some time and are currently priced to see a rate increase by June 2022.

Ray Attrill, NAB’s head of FX strategy told Reuters that the numbers were clearly higher than the RBA’s forecasts for inflation. Therefore, the likelihood they will be forced to follow their prior guidance is increasing by the day.”

He also said that “the numbers just validated the position in the money markets” which is why there was no sustained rally for the Australian dollar.

It was 0.333% lower at 0.6676.

Both the pair fell by 0.02% at 6.3297, and by 0.06% at 1.3477.

On Wednesday, The Fed will release its final report. It will also be analyzed for any clues regarding a schedule for rate rises or asset tapering. Markets are pricing in a March increase, and three additional quarter-point hikes by 2022.

Attrill of NAB stated that there was a compelling case for Fed following through on the March rate hike before June’s meeting. “The market still will have to reprice.”

“The geopolitical risks have just added another layer of safe-haven support.”

Attrill continues to refer to the geopolitical tensions between Ukraine and America over Ukraine. NATO stated it was increasing its presence in NATO and bolstering Eastern Europe with more fighter jets and ships. This move was denounced and criticized by Russia for escalating tensions.

Francesco Pesole, strategist for ING Bank says that while markets have largely ignored the tension up until now, they are placing more of a risk premium in euro to reflect this concern. There are increasing concerns that tensions might lead Moscow to reduce energy supplies to Europe.