Dollar stays near a two-and-a-half-week high

by Jonathan Adams

The U.S. Dollar Index edged up 0.08% to 94.195, staying near Friday’s peak of 94.302, its highest level since Oct. 13

The dollar was up on Monday morning in Asia, staying near a two-and-a-half-week high. Rising inflation in the U.S. that strengthened the case for earlier U.S. Federal Reserve interest rate hikes gave the U.S. currency a boost.

The U.S. Dollar Index edged up 0.08% to 94.195 by 4:34 AM GMT. The index stayed near Friday’s peak of 94.302, its highest level since Oct. 13.

The USD/JPY pair was 0.24% higher at 114.28.

The AUD/USD pair was 0.27% lower at 0.7501 while the NZD/USD pair edged up 0.05% to 0.7168.

The USD/CNY pair inched down 0.01% to 6.4046, with China’s Caixin manufacturing purchasing managers index (PMI) for October at 50.6. The manufacturing and non-manufacturing PMIs, released the day before, sat at 49.2 and 52.4 respectively.

The GBP/USD pair inched down 0.11% to 1.3676.

The dollar also approached a one-and-a-half-week high to the yen after Japanese Prime Minister Fumio Kishida’s ruling Liberal Democratic Party held its strong majority in Sunday’s parliamentary election in a surprise move. This reduces the political uncertainty in the country and allows Kishida to press forward with ramping up stimulus.

The reduction in political uncertainty is playing out with slight yen weakness this morning. The bigger driver of dollar-yen direction going ahead remains the Fed, Barclays senior FX strategist Shinichiro Kadota told Reuters.

Data released on Friday showed that the U.S. personal consumption expenditures price index was at 4.4 year-on-year while growing 0.3% month-on-month, in September. The Fed’s preferred inflation measure continued a run of inflation at levels not seen in 30 years and solidified market expectations for an interest rate hike around mid-2022.

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