Dollar near 5-week high

13 Feb 2023 , 09:39 AM

In anticipation of an important consumer price report the next day, the dollar remained close to a five-week high against major rivals on Monday due to growing expectations for more Federal Reserve policy tightening.

The yen declined as the government prepared to name a candidate who supports the present policy framework as the new governor of the Bank of Japan on Tuesday.

With Asian equities, the risk-averse Australian and New Zealand dollars declined due to concerns that higher US interest rates may stifle global economic growth. Sterling also shrank back.

Before the CPI release on Tuesday, updates to the prior data set revealed that consumer prices increased in December rather than declining as previously predicted.

Separately, surveys conducted by the University of Michigan indicated a 4.2% annual inflation estimate, which was higher than the actual figure in January. The Michigan poll is one of the indications that the U.S. central bank monitors, according to Fed Chair Jerome Powell.

The dollar index increased by 0.068% to 103.65, staying close to last Tuesday’s high of 103.96, the highest level since January 6. The index compares the value of the dollar to six other currencies, including the yen, euro, and sterling.

The U.S. dollar increased by 0.18% to 131.63 yen, staying firmly within the previous week’s range of 129.80 to 132.90.

Sterling recently traded at $1.2044, down 0.12% on the day, while the euro slipped 0.06% to $1.0669.

The Australian dollar dropped 0.13% to $0.6910, while the kiwi dipped 0.08% to $0.6306.

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