By Alun John

HONG KONG, (Reuters) – The euro slipped to a three week high on Monday after the dollar received support from U.S. job data. Inflation figures are due late this week and will confirm expectations of a Federal Reserve rate increase in March.

Monday’s Asian trading saw the European currency drop by 0.14%, to $1.1423 (from its peak on Friday in mid-January).

These gains resulted from a hawkish turn by the European Central Bank last Thursday, which led to bond yields being sharply increased and markets bringing forward when euro zone rates will rise.

After better than anticipated jobs data, however, dollar found support. The market has now priced in the possibility that the Fed will raise rates by 50 basis points in March and that they might reach 1.5% before year’s end. [FEDWATCH]

This expectation could be supported by Thursday’s U.S. Consumer Price Index.

Chris Weston, head of research for Pepperstone’s Melbourne-based brokerage Pepperstone said that until we have the CPI numbers it will just be people guessing whether the rate setting are correct. That’s going throw out front-end yields and we’ll only see small tweaks in currencies that are based on narrow yield differentials that contract and narrow.

After gaining strongly after the employment data, U.S. yields on two years were firm during Asian hours Monday. They briefly touched an all-time high of 1.33% for two years. [US/]

Benchmark 10-year yields remained steady at 1.9014% on Friday.

Sterling was $1.3521 and the yen was slightly lower at 115.35 USD, respectively, in their middle ranges.

The at 95.582 was up almost 0.1%.

The markets will be monitoring the Fed, the UK, European and Canadian central bank policymakers’ speeches to determine if they have any more hints about rate policy.

Klaas Knot is the president of the Dutch Central Bank, and one the most hawkish members the ECB’s governing board. He stated on Sunday that he anticipates a rate hike during the fourth quarter.

The Australian dollar fell to $0.7081, with the Reserve Bank of Australia being more cautious.

Also, the currency is weaker against other currencies. On Friday it touched its lowest point since September versus euro.

Elsewhere traded at approximately $41,800 on Friday, after having increased 11% in the late hours of Friday.

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Currency bid prices at GMT 0552

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

Previous changes

Session

Euro/Dollar $1.1435 $1.1451 -0.15% +0.58% +1.1474 +1.1425

Dollar/Yen 115.3100 115.2000 +0.10% +0.26% +115.3700 +115.1700

Euro/Yen 131.86 131.90 -0.03% +1.18% +132.1300 +131.7100

Dollar/Swiss 0.9253 0.9254 +0.01% +1.46% +0.9262 +0.9249

Sterling/Dollar 1.3521 1.3525 -0.03% -0.03% +1.3540 +1.3517

Dollar/Canadian 1.2736 1.2769 -0.26% +0.73% +1.2756 +1.2728

Aussie/Dollar 0.7084 0.7078 +0.10% -2.54% +0.7092 +0.7066

NZ 0.6618 0.6615 +0.08%+3.28% +0.6623 (+0.6602

Dollar/Dollar