By Gina Lee
Investing.com – The dollar was down on Monday morning in Asia, steadying after its steepest weekly loss in more than a month, as investors gauge the relative pace of interest rate hikes from central banks.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.01% to 93.618 by 10:44 PM ET (2:44 AM GMT).
The USD/JPY pair edged up 0.15% to 113.64.
The AUD/USD pair inched up 0.09% to 0.7471, with Australia releasing its consumer price index on Wednesday. The NZD/USD pair inched down 0.04% to 0.7150, with New Zealand markets closed for a holiday.
The USD/CNY pair inched up 0.09% to 6.3899, with China dealing with its latest COVID-19 outbreak. The GBP/USD pair edged up 0.14% to 1.3770. There is now a 60% chance that the Bank of England will hike its interest rate at its meeting in the following week.
The greenback softened, particularly against the yen, after U.S. Federal Reserve Chairman Jerome Powell said on Friday that asset tapering should begin soon. He did, however, say that it was not yet time for interest rate hikes. Powell’s remarks came after investors priced in Fed interest rate hikes starting in the second half of 2022. However, they have already begun trimming long dollar positions in anticipation that other central banks will move sooner.
Some investors were cautious about further gains, with the Fed is expected to begin asset tapering soon.
"Dollar risks remain skewed to the upside," Commonwealth Bank of Australia (OTC: CMWAY ) currency analyst Kim Mundy told Reuters.
"Fed members are slowly conceding that inflation risks are skewed to the upside and the upshot is that interest rate markets can continue to price a more aggressive Fed Funds rate hike cycle which can support the dollar."
Meanwhile, the Turkish lira was braced for selling, as state banks are expected to follow a surprise interest rate cut from the Central Bank of the Republic of Turkey.
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