By Alun John

HONG KONG, (Reuters) – The dollar traded at a high level of nearly a year and a half against the euro Monday. Equities market volatility is expected to drive it higher short-term due to traders focusing on upcoming meetings between the European Central Banks in Australia, the UK and the United Kingdom.

At $1.1148, the euro was just below its Friday low of $1.1119. This mark is its lowest since June 2020. In comparison, the dollar was hovering at $0.6991. This was near its 18-month low. Sterling was near last week’s one-month low at $1.34015.

Last week’s greenback record was its highest in seven months, supported by investors looking for safety after a sale of riskier assets. Analysts also raised expectations about U.S. interest rates rising.

The MSCI 50-country world index has seen its lowest month since the outbreak of the pandemic. [MKTS/GLOB]

According to market pricing, there is a 95% chance that at least 4 rate increases will occur by year’s end and 67% likelihood of at least 5.

According to analysts, “The USD smiled again” due to a mix of rate repricings and weaker risk-awareness. Barclays (LON:).

They said that weaker and more volatile equities may support the dollar in the future, but there was little chance of further gains due to rate rise expectations. Last week’s movements indicate an “aggressive normisation cycle”.

The was at 97.205. This is just below the Friday 18-month high of 97.441.

In the middle of its most recent range, the yen stood at 115.23 dollars. It was affected by rising U.S. interest rates, with very little chance of rate increases at home. However, it was supported by some demand as a safe haven.

The U.S. payroll numbers are released on Friday. However, this week’s focus shifts slightly away from Fed to other central bankers.

Australia watchers eagerly await Tuesday’s meeting of the central bank amid increasing expectations that it will announce the end to its quantitative easing programme. This will be followed on Wednesday by a speech from the RBA Governor and Friday’s statement about monetary policy.

According to Westpac analysts, the week will “be far in defining the psychology market for the next few month.” “That QE will cease will not be a surprise, so the real focus is on the RBA’s shifting economic view and its implications for the (benchmark) cash rate.”

On Thursday, the Bank of England will hold a meeting. A Reuters poll of economists predicted a second rate increase in two months. The BOE is reversing more pandemic stimulus after inflation jumped to an all-time high in 30 years.

A policy meeting will also be held by the European Central Bank on Thursday. Analysts are warning that the Fed’s approaching rate hikes will reduce the ECB’s ability to act, even though no change in policy is anticipated.

Bitcoin was trading at $37.700 in cryptocurrency after a quiet weekend.