By Gina Lee
Investing.com – The dollar was up on Monday morning in Asia, continuing its gains from the previous week. Investors remain wary of the U.S. Federal Reserve beginning asset tapering even as the number of COVID-19 cases surges globally.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.10% to 92.668 by 10:43 PM ET (2:43 AM GMT). It rolled over to the Dec. 21 contract on Sep. 12.
The USD/JPY pair inched up 0.02% to 109.95.
The AUD/USD pair inched up 0.05% to 0.7359, with the Australian dollar struggling to remain above the $0.74 mark. The NZD/USD pair inched down 0.07% to 0.7108, also battling to break out of a months-long range even as the Reserve Bank of New Zealand prepares to hike its interest rates.
The USD/CNY pair edged up 0.15% to 6.4534 in offshore trade. Economic data, including industrial production and fixed asset investment, will be released on Wednesday.
The GBP/USD pair inched down 0.02% to 1.3836.
Some investors were optimistic about the U.S. currency.
"A couple of dynamics favor the dollar," said National Australia Bank (OTC:NABZY) senior currency strategist Rodrigo Catril, particularly risk aversion as even vaccinated countries such as Singapore and the U.K. report surges in COVID-19 cases.
"Re-opening still faces challenges from the consumer, who is cautious and from bottlenecks which restrict the ability for the economy to rebound with some gusto. At the same time, rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that asset tapering is coming," he added.
The U.S. will release consumer price index data on Tuesday, while Philadelphia Fed President Patrick Harker joined the calls to begin asset tapering sooner rather than later.
"My baseline forecast is still to have inflation around 4% this year, ending this year, and then starting to fall back to 2% over the years 2022 and 2023. However, I do see elevated risk that inflation could run higher," Harker told the media.
"I'd like to start the taper process soon, so that we can finish the tapering process, so if we need to increase the policy rate, we have the room to do that. And I think we need to buy ourselves that option."