The dollar held up against its major peers on Monday, after upbeat US data strengthened expectations of a rate hike and G20 ministers pledged to lift sluggish global growth.
Data showing the world’s top economy grew faster than expected at the end of last year and a pickup in inflation raised hopes the US Federal Reserve could lift interest rates again this year.
A bloodbath on equity markets at the start of the year and weak global growth had all but shut the door on another US rate rise, which tends to lift the greenback.
But figures showing inflation hit 1.7 percent in January — nudging closer to the Fed’s 2.0 percent target — and news fourth-quarter GDP growth was revised up to 1.0 percent from 0.7 percent shifted expectations.
“The dollar’s rebound shows that economic data and prospects for Fed policy remain important drivers for forex markets still,” Khoon Goh, a foreign-exchange strategist at ANZ in Singapore, told Bloomberg News.
“If this week’s key US data beat expectations, then further dollar strength can be expected,” the analyst said ahead of reports on US employment and manufacturing.
In Tokyo trade, the dollar ticked down to 113.39 from 113.97 yen Friday in New York, but it was still up sharply from 112.90 yen in Tokyo earlier Friday.
The euro weakened to $1.0924 and 123.87 yen from $1.0935 and 124.63 yen in US trade.
Markets on Monday were also digesting the G20’s pledge to “use all policy tools — monetary, fiscal and structural — individually and collectively” to help boost growth after a meeting in Shanghai ended Saturday.
Some had expected officials from the world’s top economies to come up with a coordinated, concrete plan to combat slowing global growth and end the turmoil that has gripped financial markets.
Boosting sentiment, Japan on Monday posted its first factory output expansion in three months, offering some rare good news after a string of weak figures threw cold water hopes for a recovery.
The upbeat figures — a 3.7 percent rise in industrial production on-month in January — came as investors were looking for clues about the state of the world’s number three economy.
Disappointing inflation numbers last week stirred speculation the Bank of Japan will have to unleash more monetary easing to boost growth.
In other trading, emerging currencies broadly strengthened against the greenback, including the oil-linked Malaysian ringgit, South Korean won, Singapore dollar and Philippine peso.