Euro jumps to 3-week high amid hawkish ECB signals, dollar idles

The euro jumped to a more than three-week peak versus the dollar on Monday, and sterling rose to the highest this month as European Central Bank officials pushed the case for further aggressive monetary tightening, Reuters reported.
The greenback idled not far from a two-week low against a basket of peers ahead of key U.S. inflation data this week that might give the Federal Reserve room to slow the pace of rate hikes at its Sept. 21 policy meeting.
The euro EUR=EBS leapt as high as $1.0130 early in the Asian day before last trading 0.32% stronger than Friday at $1.0079.
Sterling GBP=D3 rose to $1.1681, and was last 0.23% higher at $1.1610.
ECB policymakers see a rising risk that they will have to raise their key interest rate to 2% or more to curb record inflation in the euro zone, sources told Reuters.
The dollar index =USD, which measures the currency against six major counterparts, was little changed at 108.78, holding close to those levels after falling back from a two-decade peak of 110.79 reached on Wednesday. It dipped to the lowest since Aug. 30 at 108.35 in the previous session.
Investors are wary ahead of Tuesday’s U.S. CPI report, even as Fed officials continued their hawkish rhetoric on Friday, the final day for such comments before a black-out period leading up to the Federal Open Market Committee’s deliberations.
Fed Governor Christopher Waller said he supports “a significant increase at our next meeting,” while St. Louis Fed President James Bullard reiterated his call for a hike of 75 basis points.
The dollar, however, strengthened 0.36% to 143.215 against the rate-sensitive yen JPY=EBS, heading back toward a 24-year zenith at 144.99 from Wednesday.
That came as the benchmark U.S. 10-year Treasury yield US10YT=RR, which the currency pair often tracks closely, hovered around 3.315% in Tokyo trading, not far from last week’s nearly three-month high of 3.365%.
Elsewhere, the Australian dollar AUD=D slipped 0.23% to $0.6831, while New Zealand’s kiwi NZD=D3 edged 0.07% lower to $0.6099.
Bitcoin BTC=BTSP eased 0.4% to $21,750, after briefly pushing up to $22,350 for the first time since Aug. 19, as the cryptocurrency attempts to find its footing following its bounce from a nearly three-month low at $18,540 last week.