Dollar trades near a seven-week high

The dollar traded at seven–week highs last week as investors took advantage of strong economic data and quick revisions. On Friday, the data showed that US consumer costs were sharply shaken in January and inflation accelerated. Traders now expect summer interest rates to be around 5.42%, compared to the 4.92% they considered in early February.

The euro dropped to its lowest against the dollar on Monday, January 6, dropping to $1.054. It then slightly recovered to 0.24%, at $1.0566.

The dollar index measures the US currency against its six major counterparts. It declined 0.21%, from 104.99 to 105.13 after seven consecutive days of gains. The index has gained 3.1% since February, and is likely to register its fourth straight monthly gain as expectations of higher interest rates make the currency more attractive than fixed–yield investments.

The main inflation gauge for consumer prices rose in the eurozone, increasing 5.4% in January. The dollar also fell modestly against the Japanese yen, settling at 136.28 yen, erasing the gains made during the session to 136.59.

Bank of Japan’s monetary policy and global economy

Governor Kazuo Ueda of the Bank of Japan stated on Monday that the advantages of the current monetary policy implemented by the bank surpass the disadvantages.

This week, investors will get information about the global economy from the US ISM manufacturing survey and the eurozone’s pre-inflation figures.

In the 20–nation currency block, the uptick in business loans slowed for the third successive month, rising 6.13% in January. The ECB has cut rates to a record low of 300 basis points since July, and has promised that increased lending will bring down inflation.