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(Bloomberg) — The dollar has regained its footing after a five-week wobble.
The U.S. currency strengthened further Monday after completing its biggest weekly gain since September 2011 as data signaled the economy is starting to recover from a tepid first quarter. Core consumer prices rose at a faster pace than expected, bolstering Federal Reserve Chair Janet Yellen’s call last week that it would be ’’appropriate’’ to raise interest rates this year for the first time since 2006. The euro weakened as Greece called on its creditors to compromise on aid demands.
“The market is more confident about a U.S. rate hike this year and a continued move towards policy normalization, and therefore buying U.S. dollars,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “Greece is still a factor which is weighing on the euro.”

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major trading partners, strengthened 0.1 percent to 1,180.72 as of 11:40 a.m. in Tokyo from Friday after jumping 2.6 percent last week.
The dollar rose 0.3 percent to $1.0985 per euro, adding to last week’s 4 percent advance. It appreciated 0.1 percent to 121.68 yen, following a 1.9 percent increase over the previous five days.

The rebound in the dollar came as hedge funds and other large speculators cut expectations for advances to the least since Sept. 19. The difference in the number of wagers on dollar gains compared with those on declines — or net longs — fell by 21,360 contracts to 226,192 in the week to May 19, according to data from the Washington-based Commodity Futures Trading Commission.Financial markets in the U.S., U.K. and Hong Kong will be closed Monday for holidays.

Financial markets in the U.S., U.K. and Hong Kong will be closed Monday for holidays.

High Bar

Minutes from the Federal Open Market Committee’s April meeting show policy makers will raise rates when they have seen further improvement in the jobs market and are “reasonably confident” inflation will move back up toward the central bank’s 2 percent goal over the medium term. Data are “unlikely” to indicate sufficient improvement in the economy by June, setting a high bar for a rate increase when the committee meets next month.

The pace of normalization is likely to be gradual once rate increases start, Yellen said Friday during a speech in Providence, Rhode Island.

Greek Negotiations

The euro came under pressure after Greek Finance Minister Yanis Varoufakis said Sunday his government has met the euro area and IMF three-quarters of the way, so it’s up to creditors to cover the remainder. German Chancellor Angela Merkel and French President Francois Hollande last week gave Greece until the end of May to reach an agreement on its aid program, including economic policy changes demanded by creditors.

In the U.S. this week, investors will be scanning U.S. durable goods, housing and consumer confidence numbers.
“Investors look exceedingly keen to jump back on the strong dollar story upon any evidence the Fed remains on track for a September liftoff in rates,” Raiko Shareef, a markets strategist in Wellington at Bank of New Zealand Ltd., wrote in an e-mail to clients. “As rather unrepentant dollar bulls, we are comforted by the Fed Chair’s messages.”

–With assistance from Rachel Evans and Lananh Nguyen in New York.

To contact the reporters on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net; Netty Ismail in Singapore at nismail3@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Jonathan Annells