Tom Westbrook

SINGAPORE (Reuters – On Tuesday, the dollar posted modest but substantial gains and kept a resurgent Euro at bay. The traders waited on U.S. Inflation data to see if it would unleash fears about faster interest rates.

After a shift of tone from the European Central Bank to hawkish, the common currency jumped 2.7% last week.

It has not been able to break resistance at $1.1483, and it eased 0.2% to $1.1418 in the Asia session. The five- and 10-year Treasury yields, which ticked to higher than two years highs, helped the dollar to edge 0.3% higher at 115.43 Japanese yen

Last week’s impressively robust U.S. labour statistics has brought extra attention to inflation, which was forecast at 7.3% (a record high for four decades) just before March’s Federal Reserve Meeting.

Futures market prices are showing a nearly 1-in-3 probability of a rate increase of 50 basis points. The dollar has supported by the possibility of more aggressive hikes.

Jan Nevruzi of NatWest Markets rate strategist said, “The surprise beat in the nonfarm payroll numbers [which we were told by Fed officials and Omicron would be very weak] leaves the Fed within an unexpected territory.”

The CPI will play a critical role in how the narrative progresses to March’s meeting. However, he stated that March would likely bring only 25 basis points of inflation, barring some major surprises.

The index rose 0.2% to 95.613.

Bitcoin and the Australian Dollar posted Monday gains, as European equity markets rallied. However, the Australian dollar was slightly weaker on Tuesday, as Asia’s cautious mood prevailed.

It fell to $0.7109 by 0.2% [AUD/]

It surpassed its monthly average of $44,000 on Monday, and was able to hold there in Asia for an additional 17% gain in just four sessions.

New Zealand’s dollar was slightly less than expected at $0.6630 Sterling dropped 0.2%, to $1.3514.

On Tuesday there will be a quiet calendar with data, and a U.S. Small Business Survey due to take place later that day. U.S. Inflation data are due Thursday.

========================================================

Prices for currency bids at 0546 GMT

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

Previous changes

Session

Euro/Dollar

$1.1419 $1.1442 -0.20% +0.44% +1.1448 +1.1418

Dollar/Yen

115.4400 115.1050 +0.23% +0.31% +115.4750 +115.1900

Euro/Yen

131.82 131.68 +0.11% +1.15% +132.0000 +131.5900

Dollar/Swiss

0.9251 0.9235 +0.18% +1.43% +0.9252 +0.9228

Sterling/Dollar

1.3514 1.3535 -0.16% -0.08% +1.3538 +1.3513

Dollar/Canadian

1.2694 1.2667 +0.22% +0.41% +1.2701 +1.2666

Aussie/Dollar

0.7111 0.7126 -0.20% -2.17% +0.7138 +0.7107

NZ

Dollar/Dollar 0.6631 0.6635 -0.05% -3.11% +0.6654 +0.6631

All locations

Tokyo sightseeing spots

Europe’s top spots

Volatilities

Tokyo Forex market information from BOJ