Liquidity is expected to be tight on Monday as US markets will be closed for the Presidents Day festivities.
In recent weeks, a series of data from the world’s largest economy pointing to a still tight labor market, high consumer prices, strong retail sales and higher producer prices have raised expectations that the central bank of the United States still has work to do to control inflation and that interest rates have to rise.
But now that markets expect the Federal Reserve funds rate to peak below 5.3% in July, analysts say the dollar’s move may have run its course for now.
Hardline comments from Federal Reserve officials have also propped up the US dollar, as they signaled that interest rates would have to rise in order to successfully quell inflation.
Similarly, two European Central Bank (ECB) policymakers said on Friday that euro zone interest rates still have room to rise, prompting forward market forecasts for the ECB’s top rate.
He euro operated at 1.0694 dollars, just above Friday’s six-week low of $1.06125. The greenback was flat against the Japanese currency at 134.18 to the dollar after hitting a two-month high of 135.12 yen on Friday.
In Asia, China kept its benchmark interest rates unchanged for the sixth consecutive month in Februaryas expected, as the world’s second-largest economy showed more signs of recovery after a pandemic-induced slump.
The yuan in international markets rose slightly to 6.8643 units per dollar, while the yuan in the local market operated at 6.8580 units per dollar.
By Samuel Indyk and Rae Wee, from Reuters agency
Source: Ambito
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