Dollar ticks up as investors gauge rates outlook -February 19, 2024 at 10:28 am EST

(Updates at 1515 GMT)

LONDON/SINGAPORE, Feb 19 (Reuters) – The dollar inched
higher on Monday after rising for the fifth week straight on the
back of strong inflation data, while the yen traded near the
psychologically important 150 level.

U.S. markets are closed for the Presidents’ Day holiday,
with trading volumes likely to be low throughout the day.

The dollar index, which tracks the currency against
six peers, was last up 0.13% at 104.35, after rising 0.18% the
previous week.

It rose to its highest since mid-November last Tuesday to
104.97 after figures showed U.S. inflation came in stronger than
expected in January, causing investors to dial down the number
of interest rate cuts they expect from the Federal Reserve this
year. But it slipped on Thursday after data showed retail sales
fell last month.

“In theory last week should have been a good week for the
dollar, but the dollar didn’t really hold on to its gains,”
Chris Turner, global head of markets at ING, said.

“Are we getting near to the point where the pricing in the
Fed cycle is about right?”

The euro was down 0.12% at $1.0763, after falling
to a three-month low of $1.0695 last week. Sterling was
unchanged at $1.2595.

Survey-based purchasing managers’ index data, released on
Thursday, will give a sense of the health of the euro zone and
UK economies in February.

The minutes from the Fed’s last meeting, due on Wednesday,
are likely to be the main release for investors this week.

Investors expect around 90 basis points of Fed rate cuts
this year, according to money market pricing, down sharply from
around 145 basis points at the start of February.

The dollar slipped 0.1% against the yen on Monday,
taking it to 150.08 yen.

It remains around 6% higher against the yen this year as
Japan has kept its ultra-loose monetary policy in place. That
has created a wide gap between the two countries’ bond yields
which has boosted the attractiveness of the dollar.

The rally has prompted speculation among investors that the
Japanese authorities could intervene to boost their currency.

Finance Minister Shunichi Suzuki last week warned that
“rapid moves are undesirable for the economy”.

Weekly data from the U.S. markets regulator showed
speculators again increased their net short position against the
yen, taking it to a more than two-month high worth $9.2 billion.

China’s onshore yuan barely budged as investors
returned from the week-long Lunar New Year break, despite
tourism revenues surging during the holiday. It last changed
hands for around 7.1987 per dollar.

(Reporting by Harry Robertson in London and Ankur Banerjee in
Singapore, Editing by Shri Navaratnam, Ed Osmond, Andrew
Heavens, Peter Graff)

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