(Update at closing. Edit wording and add author’s signature)
By Herbert Lash and Gertrude Chavez-Dreyfuss
NEW YORK, Feb 27 (Reuters) – The dollar eased from seven-week highs on Monday in line with falling U.S. Treasury yields as investors took advantage of the greenback’s recent rise to shore up their gains after strong economic data last week and prospects for interest rate hikes.
* The fall in the US currency was also exacerbated by a bigger than expected decline in US durable goods orders of 4.5% last month.
* Analysts said the report put a damper on the U.S. monetary tightening bias, but rates are likely to keep rising for longer.
* As February draws to a close, after the dollar rose nearly 3% for the month on better-than-expected U.S. economic data, investors are consolidating their recent positions, Joe Manimbo, market analyst at Convera told Washington.
* “It’s just investors taking a few chips off the table,” he said. “We’ve had a ton of data so far, and it’s been hotter than expected and that’s fueled the dollar.”
* The market awaits this month’s US unemployment data on March 10 and the consumer price index on March 14, both of which will influence Fed interest rate policy and central bank efforts and federal to curb inflation.
* Traders now expect the Fed to hike rates to around 5.4% at its September meeting, according to FEDWATCH rate futures market prices. At the beginning of February, they were counting on a maximum of only 4.9%.
* The dollar index, which measures the price of the greenback against six currencies, fell 0.513%, after hitting its highest level since January 6.
* The euro rose to $1.0607 on Monday, while the dollar strengthened 0.2% against the yen to 136.20 yen.
(Reporting by Ankur Banerjee in Singapore and Harry Robertson in London; Editing in Spanish by Ricardo Figueroa)