The dollar was in a strong position on Monday, as traders took a sharp hike in US interest rates this week and looked for safety, as data points to a weakening global economy.
The greenback Asia was up slightly against most majors at the start of the session, trading at $1.0195 on the euro and consolidating Friday’s losses to buy 136.57 Japanese yen.
The US Federal Reserve concludes a two-day meeting on Wednesday and markets are headed for a 75-basis-point (bp) increase in price, with a nearly 9 percent chance of a 100 bp increase.
“The market reaction will change how Hawkish Chair (Jerome) Powell feels with his determination to moderate inflation due to slowing growth,” said Rodrigo Catril, currency strategist at National Australia Bank.
US growth figures are also due on Thursday, although the market has already been rattled by several soft trading indicators in Europe, which snuffed out a rally in riskier assets on Friday.
An energy crisis also hung on the euro, while trade-sensitive Australian and New Zealand dollars, which hit a one-month high on Friday, retreated.
The Australian was down about 0.5 per cent at $0.6892 and the kiwi was down by the same margin at $0.6223.
Australian consumer price data is due on Wednesday and a hotter number could lend support to bets on rate hikes, although analysts warned the background was mostly negative.
“The Australian dollar will be primarily a function of the world economic outlook,” said Commonwealth Bank of Australia’s head of international economics, Joe Caperso.
“Dark outlook suggests that Aussie upside is more downside than risk and could test $0.6800 this week.”
Sterling also slipped on Monday, even as the market left a 60 percent chance that the Bank of England will raise rates by 50 bp next week. It last fell 0.3 percent to $1.1970.
Bitcoin hovered at $22.278. The dollar rose 0.4 percent to buy 0.9641 Swiss francs. The US dollar index settled at 106.840, just below a two-decade high of 109.290 in mid-July.