The dollar index, which measures the currency against six pairs, was up 0.4% at 110.06, heading towards a 20-year high of 110.79 hit on September 7.
Dollar today and blue dollar today: the minute by minute price of Monday, September 19
“There was speculation a while back that the Fed was close to ending rate hikes, but that was premature,” Nordea chief analyst Jan von Gerich said. “The Fed is nowhere near done and that’s supportive for the dollar.”
With last week’s data showing a broad-based rise in core US consumer prices, markets have eyed the possibility of a 100 basis point rate hike when the Fed wraps up its two-day meeting on Wednesday. Markets are fully pricing in a 75 bps hike and about a 20% chance of 100 bps.
This week is also dotted with holidays that could reduce liquidity and lead to more pronounced price movements, with markets in Japan and the UK closed on Monday, Australia on Thursday and Japan again on Friday, among others.
The euro was down 0.25% at $0.9993, sterling was down 0.4% at $1.1378 and ahead of Friday’s 37-year lows.
The dollar strengthened about 0.4% at 143.46 yen, hovering below a strong resistance level at 145 that has been reinforced by aggressive comments from Japanese monetary authorities on currency intervention.
The Bank of Japan is expected to maintain its massive stimulus at its meeting on Wednesday and Thursday, continuing its ultra-easy monetary policy. But a turning point may come sooner than anticipated, as the central bank recently dropped the word “temporary” from its description of elevated inflation.
Source: Ambito
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