Title: Dollar hits 5-week high on hawkish Fed, euro slips on gas woes

Aug 22, 2022 01:17AM ET

By: AnalysisWatch

The U.S. dollar hit a new five-week high against major counterparts on Monday after other Federal Reserve officials hinted at the likelihood of continued aggressive monetary tightening ahead of a key central bank symposium in Jackson Hole this week.

The Australian and New Zealand dollars rebounded strongly from near five-week lows, helped by higher commodity prices.

The U.S. dollar index, which measures the currency against six rivals including the euro, rose for the first time since July 15 to 108.26 at the start of the Asian session before trading unchanged at 108.12 points.

It gained 2.33% last week-its best weekly rally since April 2020-amid a chorus of Fed policymakers stressing that more needs to be done to curb decades of high inflation.

Money markets are currently indicating a 46.5% chance of another super-sized 75-basis-point rate hike on September 21, with a 53.5% chance of a half-point increase.

On Monday, yields on benchmark 10-year U.S. Treasury notes topped 3% for the first time since July 21.

Against the Japanese currency, which is extremely sensitive to U.S. yields, the dollar climbed to 137.44 yen, the strongest since July 27.

The dollar rose to 6.8308 yuan in mainland trading for the first time since September 2020 after the People's Bank of China cut base interest rates for one- and five-year loans, as widely expected. This was after it surprisingly eased other key lending benchmark rates last week.

Against the offshore yuan, the dollar reached 6.8520, also the strongest since September 2020.

The commodity-linked Australian dollar strengthened 0.39% to $0.6902, bouncing off the lows for the first time since July 19 after falling to $0.68595 on Friday-Dalian iron ore gained more than 2% and copper also rose.

The kiwi gained 0.4% to $0.61995 after falling to $0.61675 at the end of last week, also the first since July 19.