The US dollar held on to its gains and remained near a two-week high in early Asian trading on Wednesday, as stronger-than-expected inflation data and hawkish comments from Federal Reserve officials reinforced expectations of an interest rate hike next month.
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The dollar index, which measures the US currency against a basket of six major currencies, was steady at 102.22, close to its highest level since October 28.
The index rose 0.5% on Tuesday after data showed that US consumer prices increased more than expected in October, driven by higher food and housing costs.
Chris Weston, head of research at Pepperstone Group in Melbourne, said: "The interest rate market is not just pricing in another rate hike; it is also questioning how restrictive US monetary policy may ultimately need to become. This is a debate with much broader implications for risk assets."
The dollar maintained its gains against other major currencies in early Asian trading. The euro and British pound were steady at $1.1168 and $1.3345, respectively.
Against the Japanese yen, the dollar was unchanged at 158.715 yen. The Australian dollar rose 0.1% to $0.6870, moving slightly away from a seven-month low, while the New Zealand dollar remained steady at $0.5605.
Comments from Federal Reserve policymakers with voting rights on the interest rate-setting committee, expressing concern over rising inflation, strengthened expectations of another rate hike. This prompted traders to largely abandon bets that the central bank would leave interest rates unchanged at its next monetary policy meeting, which concludes on December 9.
In cryptocurrency markets, Bitcoin fell 0.3% to $73,566.45, while Ether declined 0.5% to $2,044.61. Both were trading near their lowest levels in three months.
Source: Reuters
