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  • Writer's pictureanalysiswatch

​Title: Dollar finds a bid ahead of U.S. inflation

Feb 08, 2022 01:01AM ET

By: AnalysisWatch

The dollar made small but broad gains on Tuesday, keeping the resurgent euro at bay as traders awaited US inflation data and feared it could trigger bets on faster rate hikes.

Last week, the single currency rose 2.7 percent after the European Central Bank made a hawkish policy shift.

However, it failed to break through resistance at $1.1483 and fell 0.2 percent to $1.1418 in Asian trade. The dollar rose 0.3% to 115.43 yen, helped by five-and 10-year government bond yields hitting a more than two-year high.

Surprisingly strong US jobs data last week put inflation at 7.3 percent, the highest in four decades, in particular focus ahead of the Federal Reserve's March meeting.

Futures markets put the probability of a 50 basis point rate hike at nearly 1 in 3, and the prospect of an aggressive increase is supporting the dollar.

The US dollar index rose 0.2% to 95.613 points.

On Monday, bitcoin and the Australian dollar rose as stock markets in Europe rallied, but the latter was slightly weaker on Tuesday as cautious sentiment prevailed in Asia.

The Australian dollar fell 0.2 percent to $0.7109 per US dollar.

Bitcoin broke through its 50-day moving average to reach $44,000 for the first time in nearly a month on Monday, and it held up in Asia, rising more than 17% in four sessions.

The New Zealand dollar was slightly weaker at $0.6630. The pound fell 0.2 percent to $1.3514.

A quiet data calendar awaits us on Tuesday with the release of the US Small Business Survey later in the day. US inflation data will be released on Thursday.

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