TOKYO : The U.S. dollar hit its highest since March 2017 against the yen and a 16-month peak versus the euro on Wednesday, as a run of strong economic data boosted bets for earlier Federal Reserve interest-rate hikes.
However, the"big drivers" of the dollar's recent broad rally are inflation and monetary policy, he said. The dollar index - which measures the currency against six rivals - rose 0.1per cent to 96.053 after earlier touching 96.266 for the first time since July of last year. St. Louis Fed president James Bullard said on Tuesday the central bank should"tack in a more hawkish direction" over its next couple of meetings to prepare in case inflation does not begin to ease.
"Hawkish comments from Bullard - voter next year - will leave markets comfortable pricing in Fed hikes 2022, a stark contrast with Europe where renewed virus suppression measures are being implemented."
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