Dollar holds steady after strong U.S. data dents rate-cut hopes -February 19, 2024 at 04:02 am EST

(Updates at 0850 GMT)

LONDON/SINGAPORE, Feb 19 (Reuters) – The dollar held
steady on Monday after ticking higher for a fifth straight week
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 little changed at 104.18, after rising 0.18%
the previous week.

It rose to its highest since mid-November last Tuesday
at 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,”
said Chris Turner, global head of markets at ING.

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

The euro was very slightly higher at $1.0783,
after falling to a three-month low of $1.0695 last week.
Sterling was up 0.17% at $1.2621.

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 0.19% against the yen on
Monday, taking it to 149.94 yen.

It remains around 6% higher against the yen this year as
Japan has kept its ultra-loose monetary policy in place,
creating 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.

Elsewhere, the dollar fell 0.33% against Sweden’s crown
to 10.407 per dollar after data showed that headline
Swedish

inflation

ticked higher in January.

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