Forex – Dollar Gains Slightly On Yen In Asia As Region Marks Lunar New Year

© Reuters. Dollar up on yen in Asia – The dollar edged higher in Asia on Friday with most markets outside of Australia, Japan and India shut to mark the Lunar New Year.

Today marks the start of the Year of the Dog, the latest turn in the 12-year lunar zodiac cycle with China, Hong Kong, South Korea, Taiwan, Indonesia, Singapore, Malaysia, Philippines and Vietnam markets shut.

rose 0.05% to 106.17 in early Asia, while nudged down 0.01% to 0.7943.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.49% to 88.47.

Overnight, the dollar languished at two-week lows against a basket of major currencies as expectations that monetary policy divergence would continue to raise demand for euro and yen assets limiting advances in the greenback offset growing signs of inflationary pressure.

The Labor Department said Thursday its producer price index for final demand increased 0.4% last month after slipping 0.1% in December. In the 12 months through January, the PPI rose 2.2%.

The U.S. Department of Labor reported Thursday that initial jobless claims increased 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10 in line with economists’ forecasts. The PPI data added to the narrative of improving inflation following Wednesday’s bullish CPI print, leading many to suggest that the Federal Reserve would adopt a more hawkish stance on monetary policy.

TD securities added an additional Federal Reserve rate hike to its 2019 forecast, estimating three rate hikes in both 2018 and 2019, while suggesting that the central bank could adopt four rate hikes for each year should the economic impact of the tax and spending fiscal policy be larger than expected.

The dollar weakness in the wake of growing expectations for a faster pace of Fed rate hikes has puzzled some market participants, while others pointed to global monetary policy divergence as a factor limiting upward momentum in the greenback.

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