Dollar hits 3-month high to euro on bets for faster Fed tightening

TOKYO: The US dollar touched a three-month high versus the euro and a one-week high versus the yen on Wednesday , after heated US inflation spurred bets of faster monetary policy tightening than Federal Reserve officials have so far signalled.

The greenback also remained just shy of the US$0.6918 mark against the New Zealand dollar, reached on Tuesday for the first time since November. It last traded largely unchanged at US$0.6956 ahead of a policy update by the Reserve Bank of New Zealand, with economists largely expecting no changes. "Markets have sided on the hawkish interpretation, bringing forward rate hike expectations to late 2022," leading to"broad-based gains" for the dollar, the note said.The dollar index, which measures the US currency against a basket of six peers, was little changed at 92.783 after earlier rising as high as 92.832 - just below the 92.844 level reached last week for the first time since Apr 5.

Traders are now looking ahead to Fed Chair Jerome Powell testifying before Congress on Wednesday and Thursday for any signals on the timing of a tapering of stimulus and higher interest rates. Powell has repeatedly stated that higher inflation will be transitory, noting that he expected supply chains to normalise and adapt.

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