Dollar Index gains on US Fed interest rate hike bets amid solid jobs data

The US dollar closed firm on Monday after Friday's solid jobs report boosted expectations for a US interest rate hike in May, while the Rupee weakened amid expectations of Fed rate hike and firm crude oil prices weighed on the local unit.

US employers hired at a strong pace in March, adding 236,000 jobs that pushed unemployment down to 3.5 per cent, signalling labour market resilience that will keep the Federal Reserve on track to raise rates again next month.

The dollar index was last up 0.53 per cent against a basket of currencies at 102.55 after reaching 102.81, the highest since April 3. The euro fell 0.36 per cent to $1.0859 after dropping to $1.08315, the lowest since April 3.

While Indian Rupee pared its early gains to close 3 paise higher at 81.99 against the US dollar.

Consumer price data on Wednesday, this week's major U.S. economic focus, is expected to show headline inflation rose by 0.3 per cent in March, while core inflation increased 0.4 per cent.

Traders are also closely watching data on bank lending after the collapse of Silicon Valley Bank in mid-March sparked fears about bank contagion and led the government and Fed to intervene to shore up liquidity in the sector.

The latest Fed data shows that commercial and industrial loans at commercial banks dropped to $2.756 trillion in the week ending March 29, from $2.824 trillion in the week ending March 15.

Deposits at US commercial banks rose near the end of March for the first time in about a month, indicating that pressures from customers pulling deposits were easing.

The dollar also gained against the Japanese yen after Ueda said it was appropriate to maintain the BoJ's ultra-loose monetary policy for now as inflation has yet to hit 2 per cent as a trend.

Oil prices settled lower on Monday as Brent crude settled down 96 cents, or 0.2 per cent, at $84.58 a barrel while US West Texas Intermediate also fell 94, or 0.1 per cent, to $79.74. Both benchmarks fell by more than $1 earlier in the session.

With Agencies Inputs