US dollar touches 7-month high after upbeat US data

[TOKYO] The US dollar inched up to a seven-month high against a basket of currencies on Monday, retaining some of the momentum from upbeat US data released the previous session that reinforced expectations for a December interest rate hike by the Federal Reserve.

The US dollar index was up 0.1 per cent at 98.122 after touching 98.158, its highest since March 10.

The US currency was steady at 104.110 yen after gaining 0.4 per cent on Friday. The euro hovered close to a near three-month low of US$1.0965 plumbed earlier on Monday.

The greenback garnered support on Friday from strong US retail sales and producer prices numbers for September - the latest indication that the US economy regained its momentum in the third quarter after a lacklustre first half.

A rise in US Treasury yields on Friday following comments from Fed Chair Yellen gave additional support to the US dollar. The 30-year Treasury bond yield reached a four-month high on Friday after Ms Yellen suggested the Fed may allow inflation to exceed its 2 per cent target.

While the market kept an eye on US yields to see how much further they could rise and lift the US dollar, events that could impact investor risk appetite were also awaited to see if the greenback could retain its upward momentum.

"The schedule this week isn't packed with strong US data releases, and market focus is likely to centre around three events," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

"These would be Wednesday's China GDP data, the ECB policy meeting after recent talk of tapering and the last US presidential debate, which would give the market a chance to confirm if Clinton has the lead over Trump."

The third and final US presidential debate takes place on late on Wednesday (US time) and the ECB holds its policy meeting on Thursday.

Elsewhere, the pound slipped 0.2 per cent to US$1.2169 . Sterling, dogged by prospects of a complex and potentially chaotic exit by Britain from the European Union, had lost nearly 2 per cent last week.

The Australian dollar was down 0.3 per cent at US$0.7596 , trimming some of its gains made on Friday on the back of a bounce in commodity prices.

REUTERS