Dollar Remained Steady amidst Threat of Inflation & Interest Rate Hikes

On Monday, the dollar steadies and traded near a 2 1/2-week high now, against major currencies as speeding threat of inflation in the United States amplified the case for earlier Federal Reserve hikes of interest rate.

The dollar index that measures the dollar against six major currencies, was changed a little at 94.166, showing it is still steady and close to last Friday's peak of 94.302, a level not seen since the mid of October.

The U.S. Dollar bought 114.175 Yen, gaining 0.13% from the end of last week. Above 114.41 would be the strongest since Oct. 20, the day it hit a multi-year high of 114.695, according to Reuters.

New Japanese Prime Minister Fumio Kishida's ruling Liberal Democratic Party defied expectations and held its strong majority in Sunday's parliamentary election, solidifying his position in a fractious party and allowing him to ramp up stimulus, Reuters added.

Shinichiro Kadota, senior FX strategist at Barclays in Tokyo said, "The reduction in political uncertainty is playing out with slight yen weakness this morning."

"The bigger driver of dollar-yen direction going ahead remains the Fed."

Investors are keeping an eye on the monetary policy in the United States and in everywhere this week, with the Federal Open Market Committee widely expected to announce a tapering of stimulus on Tuesday.