By Harry Robertson and Rae Wee
LONDON/SINGAPORE, Feb 22 (Reuters) – The dollar was little changed on Wednesday and continued to trade near six-week highs on strong economic data.
* Surveys released on Tuesday showed US business activity unexpectedly rebounded in February to its highest level in eight months. In the eurozone, a survey-based activity indicator also rebounded to its highest level in nine months.
* Signs of economic strength led traders to rely on further interest rate hikes from the Federal Reserve on Tuesday, sending the U.S. S&P 500 stock index down 2% and the dollar up 2% 0.3%.
* On Wednesday, the euro was trading at $1.065, just above Friday’s six-week low of $1.061.
* The dollar index rose less than 0.1% to 104.22, not far from a six-week high of 104.67 hit late last week.
* Investors’ attention now turns to the release of minutes from the Federal Reserve’s latest meeting on Wednesday, which could provide more insight into policymakers’ plans.
* In early February, the release of a US jobs report was the trigger for the dollar’s rally, which was helped by a string of strong data.
* On Tuesday, traders expected the Federal Reserve’s main interest rate to peak at around 5.35% in July, according to derivatives-based data from Refinitiv.
* In early February, a peak of just under 5% was expected. The Fed raised rates to a range of 4.5% to 4.75%, from 0% to 0.25% in March 2022.
* Investors also increased their bets on ECB rates. On Wednesday, Deutsche Bank said it now expects rates to rise to 3.75%, after expecting rates to rise to 3.25% from their current level of 2 .5%.
* The dollar fell 0.1% against the Japanese currency to 134.85 yen, after rising more than 0.5% on Tuesday. The pound fell 0.26% to $1.208 after rising 0.6% on Tuesday after British survey data was also strong.
(Reporting by Harry Robertson and Rae Wee; Editing in Spanish by Ricardo Figueroa)