Dollar hits six-week high on rate hike expectations

By Rae Wee and Harry Robertson

SINGAPORE/LONDON, Feb 17 (Reuters) – The dollar hit its highest level in six weeks on Friday as strong economic data out of the United States and comments from senior Federal Reserve officials prompted traders to bet due to further interest rate hikes.

* Data released on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, with monthly producer prices in January posting the biggest rise in seven months.

* St. Louis Federal Reserve Chairman James Bullard favored further rate hikes that put the cost of borrowing between 5.25% and 5.5%.

* The Fed’s rate target range is currently between 4.5% and 4.75%, after reaching between 0% and 0.25% in March 2022.

* Analysts said the data and Bullard’s austere tone boosted the dollar, sending the euro to its lowest level since Jan. 6 at $1.063, then falling 0.35% to $1.064.

* The dollar index rose to 104.24 in early trading, its highest level since early January. It then pared its gains slightly and traded up 0.12% to 103.93, heading into its third consecutive week of gains.

* Goldman Sachs economists on Thursday raised their expectations for Federal Reserve rate hikes this year.

* After waiting for two more, they now expect three straight increases of 25 basis points in March, May and June. With this, the rates would be between 5.25% and 5.5%.

* Against the Japanese yen, the dollar gained 0.68% to 134.85 yen, its highest level since mid-December. It was heading for a weekly rise of about 2.5%, its biggest gain since June.

* The pound fell 0.53% to $1.192, its lowest level since January 6. This despite the fact that UK consumers unexpectedly increased their purchases in January.

* The Swiss franc was also affected by the rise in the dollar. The dollar appreciated by 0.64% to 0.931 francs, its highest level since mid-January.

(Reporting by Rae Wee and Harry Robertson; Editing in Spanish by Ricardo Figueroa)