FOREX-Dollar barely gets lift from boost in Fed hike expectations

In other currencies, the Australian dollar AUD= advanced 0.11% to $0.7207, while the New Zealand dollar NZD= slipped 0.1% to $0.5875. Bitcoin BTC= steadied around the $80,000 level and was last at $79,841.85, having drawn support recently as investors diversified away from the dollar. The dollar wobbled on Monday despite a ramp-up in U.S. rate-hike bets, as tension in the Middle East heightened inflation risks that could force global central banks to tighten policy in tandem, eroding the U.S. yield advantage. A shift in sentiment towards the Japanese yen and worries about ever-growing U.S. debt and policy uncertainties also weighed on the greenback. Moves in currencies were largely subdued in Asia trade with U.S. markets closed for a holiday, though the dollar struggled to sustain a brief lift it received from Friday's blowout U.S. jobs report. The euro EUR= was up little changed at $1.1609, while sterling GBP= eased a touch to $1.3513. Against a basket of currencies, the dollar =USD was flat at 99.16, not far from its recent low of 98.558. Traders moved to price in a roughly 57% chance the Federal Reserve will hike rates this month 0#USDIRPR in the wake of the nonfarm payrolls release, with much now depending on Friday's inflation data. "A hot CPI print would all but seal a September hike and underpin a firmer U.S. dollar. A cooler reading would strengthen the case for a hold and leave the U.S. dollar vulnerable to a dovish Fed repricing," said Elias Haddad, global head of markets strategy at BBH. "Even if a September Fed hike becomes a done deal, we doubt the U.S. dollar will make new cyclical highs. Tightening by other major central banks limits policy divergence." The inflationary impulse from still-elevated oil prices is a major reason the European Central Bank is seen certain to lift rates to 2.75% on Thursday. Futures also imply a 75% chance of another hike to 3.0% by December. 0#EURIRPR Likewise, markets are pricing a 75% chance the Bank of Japan (BOJ) will raise rates a quarter point at its meeting on September 18, with a 60% probability of another move by December. 0#JPYIRPR The yen rose 0.1% to 156.01 per dollar JPY= on Monday, drawing additional support after Japanese Prime Minister Sanae Takaichi's economic adviser projected a BOJ hike this month. The Japanese currency had surged more than 2% last week, following a confluence of factors including the unwinding of carry trades and expectations of capital repatriation that would boost the yen. Eric Robertsen, global head of research and chief strategist at Standard Chartered, said that while carry trades have been among the strongest macro performers year-to-date despite a surge in borrowing costs globally, the "recent burst" of yen strength is a "potential threat to carry outperformance". "If the JPY were to strengthen persistently, this may signal that the increase in JPY and USD rates is starting to trigger a change in asset allocation," he said.

FOREX-Dollar barely gets lift from boost in Fed hike expectations

Other currencies and bitcoin

Dollar wobbles despite higher Fed hike bets

Inflation data now in focus for September Fed decision

Yen gains on BOJ expectations and carry-trade unwinding

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