Dollar steadies on Euro and yen Soaring inflation sends NZD to 1 month high Bitcoin loiters near record peak By Tom Westbrook SINGAPORE, Oct 18 Reuters : The US dollar was tight on Monday as soft economic data in China and climbing oil prices jangled investors' nerves that inflation will drive interest rates higher. In the Asia session, the greenback gained a touch on Tuesday as the US yield decreased to arrest a dip it suffered last week. It rose about 0.2% against the euro and about 0.1% against the yen to take the Japanese currency close to a fresh three-year low. The kiwi was an outlier, having jumped almost 0.5% to a 1-month high of $0.7105 before easing back to flat at $0.7071 after a decade-high quarterly inflation reading. Sterling also managed to hold up close to steady after hawkish weekend remarks from Bank of England Governor Andrew Bailey who said policymakers will have to act as energy prices drive consumer prices higher. China's economic growth hit its slowest pace in the third quarter in a year, data showed on Monday with power shortages crimping factory output - while crude prices rose more than 1% to test 2018 highs. The yuan eased slightly after the data. But taken together, China's slowdown, power crunch and global signs that pressure from energy costs is hurting seem to turn investors generally cautious as they brace for a bumpy period. For some time, our central argument is composed of two factors joining together to support the dollar - the Fed's gradual growth and the global Fed taking a gradual path towards eventual rate hikes, HSBC analysts said in a note. It happened sooner than we had expected. The dollar last sold 114.35 yen and traded against the euro at $1.1579 (shortest time) and was also up 1.5m to $0.7402 for the Australian Dollar. The dollar index rose 0.1% to 94.102, edging it back to the one-year high of 94.563 which was highest last week at 96.384. Bitcoin, which is regarded as inflation hedge and riding on hopes for U.S. approval of a futures exchange traded fund to funnel cash into the sector, hovered just shy of its record peak of $54,895. It purchased $62,393 last month. 2022 Minutes from September Federal Reserve meeting published on Wednesday affirmed investors' expectations that the central bank will start tapering asset purchases this year. The minutes showed policymakers readying to start tapering soon and wrapping up the process by the middle of next year. Fed funds futures are priced for rate rises to begin soon after that is complete, with markets pulling forward hike expectations to as soon as the third and fourth quarter of 2022, while two-year Treasury yields jumped to a 19 month high of 0.421%. Swap pricing also shows mounting pressure globally with an almost 30% chance of a rate hike in 2019 with nearly 80 basis points of hikes priced through 2022. Sterling was $1.3734, just below the one month high of $1.3773 set by Friday. In Auckland, where consumer prices soared higher at their fastest pace since 2010, analysts reckoned the central bank would need to stay the course on its hiking trajectory even as the lockdown in New Zealand was extended. It just reinforces the case that they do need to stick to that path, said Westpac analyst Imre Speizer. Inflation is very strong. Even in Australia where the central bank has insisted it expects to keep rates on hold until 2024, swaps are pricing hikes to begin in mid - 2022 and for 100 bps of increases before 2024 even starts. With a quiet calendar on Monday, traders look forward to the release of the Fed's ‘beige’ book of economic conditions on Wednesday and keeping an eye on China's credit markets where a number of developers owe coupon payments this week.