HONG KONG: An uptick in US economic growth increased expectations the Federal Reserve will hike US interest rates by the end of the year, providing more support to the dollar Monday but concerns over China dragged on stock markets.
Dealers are keeping a close eye on the release of key US data this week, including employment, that will provide a better idea of when the central bank will announce its lift-off.
Thursday will also see the Bank of Japan release its Tankan survey of business confidence, with analysts forecasting a dip in reaction to China's sharp growth slowdown, which has rattled global markets.
St Louis Fed chief James Bullard on Friday raised the prospect of a lift in US borrowing costs on Friday when he said he would "like to get going". While he said he was not sure if a rise would come in October, his comments reinforced the view that monetary policy would be tightened before 2016.
They also come after Fed boss Janet Yellen said Thursday she expects a hike by the year's end, pointing to recent strong data.
On Friday the Commerce Department said the US economy grew 3.9 percent in April-June, up from the 3.7 percent originally stated thanks to a boost in investment and consumer spending.
Attention will now turn to next Friday's non-farm payrolls results, with a strong figure likely to reinforce calls for an early rate move.
On forex markets the dollar rose against most emerging currencies. The Malaysian ringgit lost 0.18 percent, Taiwan's dollar shed 0.24 percent, the Thai baht was 0.17 percent lower and the Indian rupee sank 0.26 percent. Indonesia's ringgit eased 0.08 percent and is struggling at 17-year lows versus the greenback.
Koji Fukaya, the chief executive officer at FPG in Tokyo, told Bloomberg News: "US data this week is important and even if results are mixed, it won't affect the baseline as the Fed made clear its intention to raise rates this year. The dollar is set to gain broadly."
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