Sharjah24 – Reuters: The U.S. dollar lurched lower on Monday, stepping back from a 1-1/2 year high tested on Friday, as hawkish comments over the weekend by a Federal Reserve official sent the U.S. yield curve to its flattest levels in three months.

While the Fed has clearly telegraphed a March interest rate hike after its meeting last week, some investors expect policymakers are preparing the markets for a faster pace of rate increases this year to check inflationary pressures.

A quicker pace of rate hikes is also seen as dampening future growth expectations, a scenario that is playing out in the bond markets where spreads between two and ten-year U.S. Treasury yields fell below 59 bps for the first time since early November in a phenomenon known as "bear-flattening". 

Though markets are unsure on the impact of the expected Fed's rate hike trajectory on growth and inflation, some investors took the latest comments from Fed's Bostic as an opportunity to take profits on the dollar's rally in recent days.