By Rae Wee
SINGAPORE, Feb 28 (Reuters) - The U.S. dollar resumed
its rally on Tuesday following a brief pause at the start of the
week, putting it back on track to end the month with an
impressive gain after a four-month losing streak.
Market expectations that the U.S. Federal Reserve would have
to raise rates more than initially expected, which gained steam
following a slew of upbeat economic data from the United States,
have sent the greenback on a tear in recent weeks.
The dollar index , which measures the currency against
a basket of peers, rose 0.18% to 104.84 in Asia trade and was
eyeing a monthly gain of more than 2.5%, its first since
September.
Resilience in the world's largest economy has given reason
for Fed policymakers to stay hawkish, with investors now
expecting the Fed funds rate to peak just above 5.4% by
September. "The dollar has made its rebound - fully justified on the
strength of the January numbers that came through in February,
and the repricing for the Fed," said Ray Attrill, head of FX
strategy at National Australia Bank, referring to the strong run
of U.S. economic data.
"I think we're sort of lurching from one major data print to
another... The next move in the dollar is really a function of
how the February data starts to play out in March."
Elsewhere, sterling gave up some gains from the
previous session, slipping 0.18% to $1.2041.
It had surged 1% on Monday after Britain and the European
Union announced a new deal for post-Brexit trading arrangements
for Northern Ireland, known as the Windsor Framework.
That brightened the outlook for the post-Brexit UK economy,
with British Prime Minister Rishi Sunak saying it would pave the
way for a new chapter in London's relationship with the bloc.
The euro was last 0.22% lower at $1.0585, having
similarly risen 0.6% in the previous session on the news.
The British parliament is expected to vote on the deal, with
the opposition Labour Party saying it will vote in favour.
The leader of Northern Ireland's Democratic Unionist Party
(DUP) said his party was working through the details.
"The mood music suggests that this thing will succeed ...
there probably is scope for some sort of residual sterling
strength here," said Attrill.
"The real thing is, is this a springboard for a stronger,
much improved removal of trade frictions more generally, between
the UK and the EU?"
Against the Japanese yen , the dollar edged 0.07%
higher to 136.31. Incoming Bank of Japan (BOJ) Governor Kazuo
Ueda has thus far offered few clues on whether the bank could
exit its massive stimulus imminently, though he indicated that
he had ideas on such a move.
Incoming Deputy Governor Shinichi Uchida on Tuesday likewise
brushed aside the chance of an immediate overhaul of the BOJ's
ultra-loose monetary policy.
The kiwi fell 0.3% to $0.61475, while the Aussie slumped 0.28% to $0.6720.
Data released on Tuesday showed Australia's current account
surplus rose sharply in the December quarter, while separate
data pointed to a strong rebound in Australian retail sales in
January following a surprise drop in December.
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(Reporting by Rae Wee; Editing by Edmund Klamann and
Christopher Cushing)
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