(Updates with data towards closure, author and location changes, removal from London)
By Gertrude Chavez-Dreyfuss and John McCrank
NEW YORK, Feb 28 (Reuters) – The dollar rose against major currencies on Tuesday to post its first monthly gain since September, as investors bet interest rates will remain high for some time as the High inflation and fears of recession worry investors.
* Following a string of weak economic data, the dollar held steady against major currencies on Tuesday, on track for its first monthly rise since September, as investors bet interest rates will stay high for some time .
* Recent encouraging economic data, including a positive jobs report for January, helped the dollar rally in February as expectations grew that the Federal Reserve would raise rates more than initially expected to fight the inflation.
* US interest rate futures discounted the Federal Reserve’s key interest rate, which peaked at 5.4% in September, while rate cuts for this year were largely ruled out. The Fed’s key rate is currently in a target range of 4.50% to 4.75%.
* The dollar index, which compares the greenback to a basket of six major currencies, rose 0.22% to 104.88 at 2020 GMT, adding a 2.7% gain in February, its first monthly gain since September.
* Meanwhile, Tuesday’s data showed signs that the Fed’s rate hikes were starting to have the desired effect of cooling the economy, which weighed slightly on the dollar.
* “In a sea of bad news, US consumer confidence data was frosty, good for fighting inflation, but at a significant implicit cost: a drop in consumer spending which accounts for about 70% of US GDP in the country,” said José Torres, senior economist at Interactive Brokers.
* US consumer confidence fell unexpectedly in February, plunging to 102.9 from 106 in January. Economists polled by Reuters had forecast the index to be 108.5.
* Another report showed U.S. single-family home prices rose at their slowest pace in December since the summer of 2020, with the S&P CoreLogic Case Shiller National Home Price Index rising 5.8% year-over-year, the biggest year-on-year gain since August 2020.
* The greenback hit a more than two-month high against the Japanese yen earlier on Tuesday, hitting 136.93 yen, before reversing gains after the US data. The greenback was then down 0.06% against the Japanese currency at 136.15.
* The yen also fell to two-month lows against the euro and the pound.
* For its part, the euro lost 0.25% to $1.0583 after stronger-than-expected French inflation data, and the pound recovered some of its gains from the previous session against the dollar, falling 0.09% to $1.2052.
(Reporting by Gertrude Chavez-Dreyfuss and John McCrank in New York; Additional reporting by Alun John in London; Editing in Spanish by Ricardo Figueroa, Carlos Serrano and Aida Peláez-Fernández)