Dollar rises ahead of US inflation data and the central bank meeting

The dollar opened higher on Monday, with US inflation data and the Federal Reserve’s final monetary policy meeting of the year likely to determine the dollar’s movement during the week, while increasing deflationary pressures in China weighed on the yuan.

The US dollar rose again above 145 yen to 145.62 yen, reversing a sharp decline against the Japanese currency at the end of last week as bets increased that the Bank of Japan’s ultra-loose interest rate policy may be coming to an end.

The British pound fell 0.04 percent to $1.25425 and settled near its lowest levels in two weeks, which it recorded on Friday at $1.2504.

Data on Friday showed US job growth accelerated in November, while the unemployment rate fell to 3.7 percent, confirming the resilience of the labor market in the world’s largest economy and defying expectations that the Federal Reserve will approve an imminent cut in interest rates starting early next year.

These numbers prompted traders to retreat from their expectations about when the Federal Reserve could begin cutting interest rates, as many are now leaning toward expecting it to begin this step in May instead of March.

The euro rose 0.07 percent to $1.0768, but it was not far from the lowest level recorded in more than three weeks on Friday at $1.07235, while the dollar index rose 0.07 percent to 104.03 points.

The index rose more than 0.7 percent last week, recovering from losses that extended for three weeks.

The focus is now shifting towards US inflation data scheduled for Monday, as expectations indicate a continued decline in consumer prices on an annual basis, followed by the Federal Open Market Committee’s decision on monetary policy scheduled for Wednesday after a two-day meeting.

In Asia, data released over the weekend showed consumer prices in China falling at the fastest pace in three years in November, while producer prices fell further, indicating rising deflationary pressures as weak domestic demand casts doubt on the country’s economic recovery. .

The yuan fell to its lowest levels in three weeks in local and foreign markets on Monday, recording 7.1833 to the dollar.