FOREX-Dollar off lows as U.S. inflation test looms

ISTANBUL, Jan 14 (Reuters) – Turkey’s lira was stronger on Friday after Finance Minister Nureddin Nebati was cited as saying inflation would peak in January and start to fall from May, reaching single digits by June 2023 when elections are scheduled.

Japanese households’ inflation expectations rose to a two-year high, a quarterly survey showed, in a sign the rising cost of living was starting to change public perceptions about future price moves.

By Kevin Buckland TOKYO, Jan 4 (Reuters) – The U.S.

dollar reached its strongest level in more than a month against the Japanese yen on Tuesday, lifted by a jump in Treasury yields overnight as traders bet on an early Federal Reserve interest rate hike despite surging COVID-19 cases. The greenback rose as high as 115.395 yen for the first time since Nov.

25, as long-term Treasury yields leapt 12.5 basis points overnight to touch 1.6420% for the first time since Nov. 24. Money markets have fully priced in a first U.S. rate increase by May, and two more by the end of 2022. The dollar index, which measures the currency against the yen and five other major peers, held close to the one-week high of 96.328 reached on Monday.

The euro traded at $1.13065, lifting off the one-week low of $1.12795 from overnight. “The market is pricing in a more aggressive U.S. rate hike scenario – or at least the risk thereof – in 2022, and that definitely remains the key support for the dollar,” said Shinichiro Kadota, senior FX strategist at Barclays in Tokyo.
While the surge in coronavirus cases caused by the Omicron variant continued to impact global travel and public services, and delay the reopening of some U.S. schools after the holidays, investors remained optimistic that lockdowns would be averted. On Monday, the U.S.

Food and Drug Administration authorized the use of a third dose of the Pfizer and BioNTech COVID-19 vaccine for children aged between 12 and 15 years, and narrowed the time for all booster shots to five months from six months after primary doses. The Australian dollar hovered close to a near two-week low of $0.7184 reached in the previous session. Sterling was about flat at $1.3480 from Monday, when it slipped as low as $1.3431 for the first time since Nov.

29. ======================================================== Currency bid prices at 0039 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1305 $1.1299 +0.05% -0.56% +1.1307 +1.1293 Dollar/Yen 115.3400 115.2600 +0.07% +0.28% +115.3500 +115.3400 Euro/Yen Dollar/Swiss 0.9178 0.9186 -0.08% +0.63% +0.9189 +0.9177 Sterling/Dollar 1.3476 1.3481 +0.00% -0.33% +1.3485 +1.3480 Dollar/Canadian 1.2751 1.2746 +0.04% +0.85% +1.2755 +1.2742 Aussie/Dollar 0.7194 0.7191 +0.05% -1.02% +0.7198 +0.7185 NZ 0.6788 0.6788 +0.01% -0.83% +0.6791 +0.6785 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Kevin Buckland; Editing by Simon Cameron-Moore)

Federal Reserve Chair Jerome Powell on Tuesday gave no clear indication that the Fed was in a rush to speed up plans for tightening monetary policy, putting some downward pressure on the greenback which has benefited from U.S.

rate-hike expectations in recent weeks.

“There’s definitely cautious optimism around, though the dollar is mostly just recovering the ground it lost yesterday afternoon,” said Kit Juckes, head of FX strategy at Societe Generale in London.

“Optimism, I think, can be seen in USD/JPY pulling away from 115,” Juckes added, as the Japanese currency fetched 115.18 per dollar, its lowest in a month and not too far from its November trough of 115.51.

Investors are hoping that Powell will give clues as to the timing of monetary policy tightening, when he answers questions from the Senate Banking Committee as he seeks a second four-year term as head of the Fed.

The report also increased expectations the Federal Reserve will begin to hike interest rates at its March meeting, with futures on the federal funds rate implying a 90% chance of a hike, up from 80% on Wednesday.

The Japanese yen strengthened 0.22% versus the greenback at 115.59 per dollar.

The yen has taken the brunt of the damage while the greenback has strengthened recently, with the dollar hitting a five-year high versus the yen earlier this week.

LONDON, Jan 11 (Reuters) – The dollar slipped on Tuesday but was stuck within recent ranges as investors waited for U.S.
Federal Reserve Chair Jerome Powell to speak at a congressional hearing later in the day.

Despite surging more than 50% last week following state-backed market interventions, it has lost 40% of its value this year.
However, Turkey’s Finance Minister Nureddin Nebati said on Wednesday that the current swings in the lira were not worrying and that it would return to normal levels.