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kiwi increases in value as global inflation rises; dollar weakens as world inflation increases; u.s. dollar falls in favor of ukraine;

kiwi increases in value as global inflation rises; dollar weakens as world inflation increases; u.s. dollar falls in favor of ukraine;

  • Summary:
  • Soaring inflation has sent NZD to a 1-mnth high.
  • Dollar rises on euro and yen as currency exchange rates increase.
  • Bitcoin is on a roll near resemblance to its historic high.

The dollar made a rough start to the week on Monday, with the kiwi and sterling moving higher after tumultuous inflation readingout in New Zealand and hawkish remarks from Britain's central bank chief that put rate increases in investors' sights.

The dollar index has now dropped about 0.6% from last week's 2021 highs as investors believe that while price pressures may push forward interest rate increases by the Federal Reserve, other central banks may have to be more aggressive during the tightening cycle.

New Zealand reported its highest quarterly rise in consumer prices in a decade on Monday. Andrew Bailey, the bank of England governor, said on Sunday that rising energy prices will prolong a pulse in inflation and policymakers "will have to act" if they see risks.

The kiwi climbed by about 0.3% to a one-month high of $0.7105, according to the report. Sterling climbed 0.1% to $1.3762, just shy of Friday's one-month high of $1.003773.

The Australian dollar was also near its highest level in six weeks, oscillating around $0.7413. Oil futures rose to new three-year highs and sparked speculation that even more price increases are sweeping across global supply chains.

"The rest of the world is probably outpacing the United States in inflation, for now, and it places more strain on those central banks than the U.S." stated Westpac currency analyst Imre Speizer.

In New Zealand, he added, the surprise price increase will only reinforce the need for the Reserve Bank of New Japan to keep its hiking ploy.

The dollar lost modestly on the euro and remained steady on yen, trading at $1.1587 per euro while buying 114.22 Yen last trading for $1.0087.

Bitcoin, touted as an inflation hedge and fueled by hopes for U.S. approval of a futures-based exchange traded fund that would funnel cash into the sector, hovered just shy of its record high of $64,895. It last sold for $62,233.

Fed funds futures are now fully pricing U.S. rate hikes to begin next September as inflation pressures rise, although a relatively short cycle is anticipated, with pricing suggesting rates could stay at 1.5% through 2026.

With an almost 30% chance of a Bank of England rate hike this year and nearly 80 basis points of hikes priced through 2022, swaps pricing suggests swifter and longer action is now more likely elsewhere.

Even in Australia, where the central bank has stated it expects to keep rates on hold until 2024, swaps are pricing hikes starting mid-2022 and for 100bps hike hike s before 2022 even begins.

Chinese gross domestic product data will be released on Monday, with analysts expecting a slowerdown, and there is an intense focus on China's credit markets, where dozens of property developers have coupon payments due.

The yuan was the strongest in offshore trade at 6,4324 dollars.

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