Dollar near 18-month high ahead of bumper central bank week

Dollar near 18-month high ahead of bumper central bank week

HONG KONG: The dollar was near a year-and-a-half high against the euro on Monday with equities markets volatility expected to push it higher in the short-term as traders eyed upcoming Australian, UK and European central bank meetings.

The euro was at $1.1148, just off last Friday's low of $1.1119, its weakest since June 2020. The Aussie dollar was at $0.6991, also languishing near Friday's 18-month low, while sterling was at $1.34015, near the one-month low hit last week.

The greenback had its best week in seven months last week supported by investors seeking safety amid a sell-off in riskier assets and by analysts raising forecasts for U.S. interest rate hikes.

MSCI's 50-country main world index is headed for its worst month since the start of the pandemic.

Market pricing now suggests a more than 90% chance of at least four rate hikes by the end of the year and a 67% chance of at least five.

"The USD 'smiled' again, drawing on a combination of rates repricing and much weaker risk sentiment," said analysts at Barclays.

Looking forward, they said weak and volatile equities could support the dollar but the potential for further dollar gains based on rate hike expectations was limited, as last week's moves