SYDNEY- The dollar made a steady start to the week on Monday but was kept below Friday peaks, as currency traders seek a path between markets’ volatile interest rate projections and central bankers vowing to keep rates low even as inflation surges.
Figures due Wednesday are expected to show US consumer price growth running hot at 5.8 percent year-on-year, the next big test of faith in the Federal Reserve’s insistence it will be patient with interest rate hikes.
In early Asia trade, the dollar was marginally higher against the yen and crept from a one-week low to 113.49 yen.
After briefly touching a 15-month top of $1.15135 on the euro in the wake of strong US labor data on Friday, the greenback steadied at $1.1566 per euro.
Sterling, which was walloped when the Bank of England surprised traders by holding rates steady last week, fell to a five-week low of $1.3425 on Friday, before bouncing to hold at $1.3487 on Monday.
The Bank of England’s surprise triggered a sharp reversal late last week in what had become quite aggressive bets on imminent rate hikes in Britain and globally, while stocks have meandered higher through the maelstrom in bond markets.
“Central banks have distorted a whole lot of markets, pumping up the equity market and pumping up the bond market,” said Jason Wong, a strategist at Bank of New Zealand in Wellington.
