TOKYO (Reuters) – The U.S. dollar eased on Tuesday following its best rally this month against major peers as a resilient U.S. labour market bolstered the case for a Federal Reserve rate hike next month.<\/p>\n\n\n\n
At the same time, bets for a peak in U.S. rates in coming months spurred leading cryptocurrency bitcoin to top $30,000 for the first time since June.<\/p>\n\n\n\n
The Australian dollar jumped 0.46% to $0.66725, clawing back all of the previous day’s losses, amid a thawing of trade tensions with China, as the pair agreed to end a dispute over Australian barley.<\/p>\n\n\n\n
The\u00a0U.S. dollar index\u00a0– which measures the greenback against six major counterparts – slipped 0.16% to 102.31, following a 0.39% advance at the start of the week. The index had dropped to a two-month low of 101.40 on Wednesday.<\/p>\n\n\n\n
The euro added 0.26% to $1.08885 after Monday’s 0.34% retreat. Sterling ticked up 0.2% to $1.24085 having declined 0.23% overnight.<\/p>\n\n\n\n
The dollar slipped 0.21% to 133.31 yen, after jumping 1.1% on Monday.<\/p>\n\n\n\n
Selling pressure eased on the yen, which is highly sensitive to long-term U.S. bond yields, as the\u00a010-year Treasury yield\u00a0edged lower in Tokyo trading after a sharp two-day climb.<\/p>\n\n\n\n
The Japanese currency’s Monday slide was helped by new Bank of Japan Governor Kazuo Ueda, who vowed to stick with ultra-easy stimulus settings at his inauguration on Monday.<\/p>\n\n\n\n
“The BOJ under Mr. Ueda will intentionally try to be behind the curve and push up inflation expectations a little further, so he needs to keep the exchange-rate stable,” said Masayuko Kichikawa, chief macro strategist at Sumitomo Mitsui (NYSE:SMFG) Asset Management in Tokyo.<\/p>\n\n\n\n
“It is highly likely that the U.S. economy will slow down in the second half of this year, leading to lower long-term interest rates over there, and if the BOJ does something to push up long-term interest rates here, that could strengthen the yen, undoing recent positive developments in Japan.”<\/p>\n\n\n\n
Traders now see the Fed as 71% likely to raise rates by another quarter point on May 3, after data released on Good Friday showed U.S. employers continued to hire at a strong pace in March, pushing down the jobless rate. Last week, money markets priced a hike next month as a coin toss.<\/p>\n\n\n\n
The consumer price index (CPI), due on Wednesday, will be the next major clue for Fed policy direction.<\/p>\n\n\n\n
“Financial markets have been too pessimistic about the U.S. economy since several small U.S. banks collapsed in March,” Commonwealth Bank of Australia (OTC:CMWAY) strategists Joseph Capurso and Kristina Clifton wrote in a client note, referring to the demise of SVB and\u00a0Signature Bank\u00a0(OTC:SBNY).<\/p>\n\n\n\n
“Strong underlying CPI is likely to be the catalyst for a change in market pricing for May, and delay pricing for the start of rate cuts,” they said, postulating the dollar index could lift toward the 100-day moving average at 103.91 this week.<\/p>\n\n\n\n
Traders currently expect the Fed to start cutting rates from around September.<\/p>\n\n\n\n
Bitcoin\u00a0touched a fresh 10-month high at $30,438 on Tuesday before last fetching $30,053, after breaking free of recent ranges on Monday.<\/p>\n\n\n\n
The digital token had been stuck between about $26,500 and $29,400 for the previous three weeks.<\/p>\n