By Alun John and Gertrude Chavez-Dreyfuss

LONDON/NEW YORK (Reuters) – The greenback rose to a one-week excessive in opposition to the rate-sensitive Japanese yen in uneven buying and selling on Monday, on market expectations that the Federal Reserve will hold financial coverage tight for longer, sending U.S. Treasury yields on the quick finish of the curve greater.

These expectations might be challenged or bolstered by the week’s essential occasion – the discharge of U.S. shopper value information on Tuesday – which loomed over Monday’s buying and selling.

“For the Fed, it would not appear that charge hikes are over but. (Fed Chair Jerome) Powell hinted of a better peak charge final week if the roles market continues to be scorching,” mentioned Erik Bregar, director, FX & treasured metals danger administration at Silver Gold Bull in Toronto.

“I discovered the Fed communicate final week to be hammering residence greater charges for longer. That is why the U.S. greenback has had momentum over the past week and a half,” he added.

The greenback rose to as excessive as 132.86 yen, nearing final week’s 132.9, the best since Jan 6.. It was final down practically 1% at 132.66 yen.

The dollar tracked the rise in U.S. Treasury two-year yields, which had been final 3.2 foundation factors (bps) greater at 4.544%, after hitting their highest since late November.

The euro hit a one-month low of $1.0656 in Asia buying and selling, however was final at $1.0706, up 0.3%. The British pound rose 0.5% to $1.2123. Final week, sterling hit a one-month low of $1.1961.

That left the , which tracks the dollar in opposition to six different main currencies, at 103.44, barely down on the day.

Larger U.S. yields had been a significant driver of the softer yen. The benchmark 10-year U.S. treasury yield on Monday hit a recent six-week excessive of three.755% and the two-year yield hit its highest since late November at 4.56%.

The Japanese foreign money dropped sharply final 12 months, reaching a 32-year low of 151.94 per greenback as U.S. charges rose whereas Japanese charges stayed pinned close to zero.

It has regained floor this 12 months as U.S. charges regarded like they had been close to their peak, additionally rising on expectations the Financial institution of Japan will transfer away from its ultra-loose stance, however each now appear like they may come later than had been anticipated.

Sources mentioned on Friday that former Financial institution of Japan board member Kazuo Ueda is ready to turn out to be the subsequent governor. In an interview the identical day, Ueda mentioned it was applicable for the BOJ to take care of its present ultra-easy coverage.

In the USA, a lot stronger jobs information launched at first of February suggests the economic system is performing strongly, that means there may be much less hazard for the Fed in conserving charges elevated.

Because of this, Tuesday’s U.S. CPI report might be a pivotal information launch.

“Tomorrow, with CPI, could possibly be a possible inflection level,” mentioned Silver Gold Bull’s Bregar. “It would not shock me that the estimates are greater vis-a-vis the earlier month due to all of the sturdy information we’ve got had of late.”

Cash markets are positioned for a peak in U.S. rates of interest of 5.2% round July, in contrast with the present goal charge of 4.5-4.75%, however have principally walked again expectations of main charge cuts later within the 12 months.

Elsewhere, the Swiss franc strengthened after Swiss inflation information got here in greater than anticipated. The greenback slid to as little as 0.92 Swiss francs and was final down 0.4% at 0.9204 francs.

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Foreign money bid costs at 10:28AM (1528 GMT)

Description RIC Final U.S. Shut Pct Change YTD Pct Excessive Bid Low Bid

Earlier Change

Session

Greenback index 103.3700 103.6000 -0.20% -0.116% +103.8400 +103.3500

Euro/Greenback $1.0714 $1.0678 +0.35% +0.00% +$1.0718 +$1.0656

Greenback/Yen 132.5950 131.4150 +0.89% +1.13% +132.8600 +131.1100

Euro/Yen 142.07 140.27 +1.28% +1.26% +142.1000 +140.3200

Greenback/Swiss 0.9208 0.9237 -0.31% -0.41% +0.9259 +0.9200

Sterling/Greenback $1.2129 $1.2059 +0.59% +0.30% +$1.2133 +$1.2031

Greenback/Canadian 1.3337 1.3346 -0.07% -1.57% +1.3379 +1.3325

Aussie/Greenback $0.6957 $0.6919 +0.56% +2.06% +$0.6959 +$0.6891

Euro/Swiss 0.9864 0.9861 +0.03% -0.31% +0.9877 +0.9847

Euro/Sterling 0.8831 0.8852 -0.24% -0.15% +0.8876 +0.8824

NZ $0.6357 $0.6311 +0.76% +0.15% +$0.6359 +$0.6291

Greenback/Greenback

Greenback/Norway 10.1090 10.1565 -0.23% +3.26% +10.1800 +10.1300

Euro/Norway 10.8341 10.8351 -0.01% +3.24% +10.8680 +10.8113

Greenback/Sweden 10.4005 10.4524 -0.17% -0.07% +10.4913 +10.4018

Euro/Sweden 11.1445 11.1631 -0.17% -0.05% +11.1860 +11.1370