Dol­lar gains on Septem­ber rate hike hopes


The dol­lar rose against the euro and yen on Mon­day as up­beat US data kept hopes for an in­ter­est rate rise as early as next month.

In Tokyo, the green­back bought 124.41 yen, up from 124.32 yen in New York on Fri­day. The euro slipped to $1.1086 and 137.91 yen, from $1.1112 and 138.14 yen in US trad­ing last week. Sen­ti­ment got a lift on Fri­day as solid US in­dus­trial pro­duc­tion, whole­sale prices and July re­tail sales data all sig­nalled the world s top econ­omy was strength­en­ing.

The num­bers boosted ex­pec­ta­tions the US Fed­eral Re­serve could be set to raise its key in­ter­est rate for the first time in al­most a decade as early as Septem­ber -- a plus for the dol­lar. "With a Septem­ber Fed hike priced around a 50 per­cent prob­a­bil­ity, any de­vel­op­ments that sug­gest a change in tim­ing are be­ing acted upon," Sam Tuck, a se­nior cur­rency strate­gist at ANZ Bank New Zealand, told Bloomberg News. Calm was re­turn­ing to cur­rency mar­kets af­ter China spooked in­vestors last week by de­valu­ing the yuan and mov- ing to a new sys­tem for cal­cu­lat­ing its daily trad­ing ref­er­ence rate. The sur­prise move, fol­lowed by two days of ma­jor cuts, fanned fears of ig­nit­ing a cur­rency war in which coun­tries push down the value of their units to lift ex­ports. "The guts of the de­val­u­a­tion or­ches­trated by the Peo­ple s Bank of China... is prob­a­bly be­hind us," Na­tional Aus­tralia Bank said in a com­men­tary.

"Fix­a­tion with the daily (yuan) fix threat­ens to quickly be­come so last week . We should now quickly re­turn to fret­ting about the Fed."

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