The dollar has rebounded from a 10-month low as investors push up their forecasts for US interest rates after signs of stubborn inflation and unexpectedly strong economic activity.
The world’s most important reserve currency rose to a 20-year high in September but tumbled 11.2 per cent over the following four months as US inflation declined from a multi-decade peak, allowing the Federal Reserve to slow the pace at which it raised interest rates towards the end of 2022. Tamer rate rises and the prospect of steady or even falling rates in 2023 removed one of the currency’s key supports.
However, February has begun with a flurry of economic data suggesting the world’s biggest economy remains in rude health, pushing the dollar back up by 3 per cent against a basket of six other leading currencies since the start of the month and erasing January’s decline.
The US last month added more than half a million jobs, almost triple…
