The dollar rallied on the Federal Reserve's interest rate hike bet, and the new president's speech stimulated the yen's three-game losing streak

On April 11, Beijing time, the Asian market morning, the dollar index fell slightly, and is currently trading around 102.44. The dollar strengthened on Monday, and Friday's strong jobs report boosted expectations of a U.S. interest rate hike in May, while the yen weakened as the new governor of the Bank of Japan, Kazuo Ueda, said he was in no hurry to scale back his massive stimulus measures.

U.S. employers hired at a strong pace in March, adding 236,000 jobs and pushing the unemployment rate down to 3.5 percent, a sign that the labor market is resilient and will keep the Federal Reserve on track to raise interest rates next month.

"In my view, the pendulum of market sentiment will swing back in favour of the Fed raising interest rates early next month," said Marc Chandler, chief market strategist at BannockburnGlobalForex, noting that the momentum indicator for the dollar pair was "overstretched" and could benefit the dollar's near-term strength.

The dollar index closed 0.44 percent higher at 102.58 on Monday after hitting 102.81, its highest since April 3. Consumer price data on Wednesday, the main focus for the U.S. economy, is expected to show headline inflation rose 0.3 percent in March, while core inflation rose 0.4 percent.

Americans said last month that it was harder to get credit than at any time in nearly a decade, a New York Fed report said Monday, as they braced for higher inflation in the years ahead. Traders are also closely monitoring data on bank lending as the collapse of Silicon Valley Bank in mid-March raised fears of contagion in the banking sector and led the government and the Federal Reserve to intervene to shore up liquidity in the sector. "We know from the Fed's perspective that price pressures are still high and the labor market is still strong," Chandler said. "That hasn't really changed, it's bank behavior that has changed."

Fed funds rate futures traders put the odds at 74% that the Fed will raise rates by another 25 basis points at its May 2-3 meeting.

The euro closed 0.39 per cent lower at 1.0853 against the dollar on Monday after falling to 1.0830, its lowest since April 3, as the outlook for the eurozone economy remained cloudy, continuing to weigh on the single currency.

The European Central Bank raised its forecast for eurozone GDP by 0.5 percentage points, projecting it to fall to 1% in 2023 from 3.6% in 2022.

The European Central Bank's inflation expectations have also improved significantly, with a new economic bulletin showing that inflation is expected to be below 3% by the end of 2023, 1 percentage point lower than last December's estimate, mainly due to falling energy prices.

For the ECB, however, downside risks to the growth outlook remain. If the Ukraine crisis and market tensions persist, it will weaken confidence and lead to tighter credit conditions.

The dollar hit 133.87 against the yen on Monday, its highest level since March 15, before closing up 1.14 percent at 133.58. Kazuo Ueda, the new governor of the Bank of Japan, said it was appropriate to maintain the Bank of Japan's ultra-loose monetary policy for now as inflation has not yet reached a trend of 2 percent.

The Federal Bank of Australia said that despite signals from Kazuo Ueda, the new governor of the Bank of Japan, that it is unlikely to adjust the monetary policy framework for the time being, the Bank of Japan is still more likely to tighten monetary policy given the trend of inflation and wage levels. The report said that the dollar against the yen will continue to be guided by U.S. Treasury yields and is still expected to rise to 134.68, provided that the financial marekt raises its expectations for the federal funds rate.

On Monday, the pound broke a five-day low against the dollar to 1.2344, and finally closed down 0.26% at 1.2379.

Although the UK's economic macro expectations have improved, factors such as continued high inflation, underinvestment, and falling demand in overseas markets have made investors less optimistic about UK economic growth, which will limit the further sharp rise of the pound against the US dollar.

In addition, the strike wave in the UK continues, which also has a certain impact on the economy. The National Education Union voted on April 4 local time to hold another three-day strike from the end of June to the beginning of July this year.

On Monday, the dollar rose against the Canadian dollar and fell back, finally closing up 0.01% at 1.3508.

Canada's "Globe and Mail" analysis said that the Bank of Canada is expected to keep interest rates unchanged on Wednesday. The Bank of Canada has been in a state of inaction since the beginning of March. After eight consecutive interest rate hikes, the base rate stabilized at 4.5%. Since then, the Bank of Canada has received conflicting economic signals.

Canada's economy performed better than expected in early 2023, but turmoil in the banking sector in the US and Europe over the past month has raised concerns about financial stability and dimmed the outlook for economic growth, with jittery banks expected to reduce lending. Bank of Canada Governor John McClum said the decision to pause rate hikes was "conditional" and that the central bank could raise rates again if there was "mounting evidence" that inflation was not subsiding. However, private sector analysts see little chance of the Bank of Canada resuming rate hikes this week. In addition, most analysts believe a rate cut is unlikely until inflation falls further.

Tuesday's key data and events