"Only once we notice a reversal in this data, the fear of
inflation currently affecting the market is going to ease."
Friday's data showed that the core measure of U.S. personal
consumption expenditures inflation, which strips out volatile
food and energy costs, came in at 4.7% year-on-year in January,
up from 4.6% in December.
Core consumer price inflation in the euro zone rose to a
record high of 5.3% year-on-year in January.
The dollar was last steady against the Japanese yen at 136.3 yen, reversing some of its gains after rising
to a more than two-month high of 136.58 earlier in the session.
Incoming Bank of Japan Governor Kazuo Ueda said on Monday
the merits of the bank's current monetary policy outweigh the
costs, stressing the need to maintain support for the Japanese
economy with ultra-low interest rates.
The pound was also flat to $1.1946, after falling
for three straight sessions.
Investors will get more information on the state of the
global economy this week, with U.S. ISM manufacturing survey
data for February due on Wednesday; and preliminary euro zone
CPI inflation figures for February due the following day.
"We're in a bit of a nervous environment," said Moh Siong
Sim, currency strategist at Bank of Singapore, adding that the
market is uncertain about the pace of Fed interest rate rises.
"Can (the Fed) maintain 25 basis point hike? Or will they be
forced to re-accelerate the pace? So I think these are the
questions that the market is grappling with," Sim said.
The Aussie was 0.08% lower at $0.672, after falling
below $0.67 to its lowest since early January earlier in the
session.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates Currencies vs. dollar ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Ankur Banerjee in Singapore and Harry Robertson
in London; Editing by Shri Navaratnam, Robeert Birsel)
(Recasts to reflect dollar wavering; adds analyst comment; adds
chart; updates prices)
By Ankur Banerjee and Harry Robertson
SINGAPORE/LONDON, Feb 27 (Reuters) - The dollar wavered
near a seven-week high on Monday, as investors took stock of
last week's strong economic data and rapid reconsideration of
where interest rates will peak.
Data on Friday showed U.S. consumer spending rebounded
sharply in January, while inflation accelerated.
Traders now expect the Fed to raise interest rates to around
5.4% by the summer, according to pricing in futures markers . At the beginning of February, they envisaged rates
rising to a peak of just 4.9%.
The euro fell to its lowest level against the
dollar since Jan. 6 on Monday as the U.S. currency gained,
slipping to $1.053. It then rebounded somewhat and was last up
0.1% to $1.055.
The dollar index , which measures it against six major
peers, was last down less than 0.1% at 105.11, after earlier
climbing to a seven-week high of 105.36.
The index is up 3% for February and set to snap a four-month
losing streak. Expectations of higher interest rates tend to
boost a currency, by making the country's fixed-income
investments look more attractive.
"Whereas headline rates are falling, the trend of rising
core inflation rates has been unbroken," said Ulrich Leuchtmann,
head of FX research at Commerzbank.
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