Dollar stays close to 5-week high

The US dollar stood close to a five-week high against major rivals on Monday, supported by a surge in bets for continued Federal Reserve policy tightening before the release of a significant consumer price report. The Japanese yen declined with the government expected to nominate a candidate supporting current policy settings as the new governor of the Bank of Japan. Sterling followed suit, while the risk-sensitive Australian and New Zealand dollars fell with Asian equities on concerns that higher US rates could affect growth.

Barclays’ senior FX strategist, Shinichiro Kadota, said that the dollar has been well-backed since the US jobs data from earlier in the month, and Federal Reserve comments have been leaning more to the hawkish side. However, the focus is on the consumer price index (CPI) report. Kadota believes that the market is more worried about upside risks to inflation rather than downside risks.

As the data revealed, the dollar index added 0.068% to 103.65. The index measures the greenback against six rivals, including the euro, yen, and sterling. The US currency increased by 0.18% to 131.63 yen, while the euro lost 0.06% to $1.0669. Sterling stood at $1.2044, down 0.12% on the day. Meanwhile, the Aussie dropped 0.13% to $0.6910, and the New Zealand kiwi declined 0.08% to $0.6306.

Sources have reported that former BOJ board member Kazuo Ueda is expected to be nominated as the next governor. In an interview, he stated that the BOJ’s current ultra-easy policy was appropriate.