By Lisa Twaronite, MarketWatch TOKYO (MarketWatch) — The dollar slipped against most other major currencies in Asian trading Monday, but analysts said the greenback was supported by expectations of higher U.S. interest rates. The dollar index (DXY 78.31, -0.15, -0.19%) , which measures the U.S. unit against a basket of six currencies, was at 78.341, down from 78.379 in late North American trading Friday. “Reflecting the recent strong run of U.S. economic data, the market pricing of Fed [U.S. Federal Reserve] rate hikes has been on the rise since the beginning of the year, and now the market is expecting a rate hike by January 2012,” said currency analysts at Barclays Capital. This week, they said in a Monday note, U.S. retail sales data on Tuesday and consumer price data on Thursday “will provide a gauge of whether the recent optimism in rates markets is justified.” Read U.S. Economic Preview. Barclays economists “expect slightly above-consensus numbers overall, which if realized would provide further support for the [dollar], in our view,” they said. The euro (EURUSD 1.3552, +0.0044, +0.3258%) was buying $1.3549, slightly below its $1.3558 level late Friday, but the British pound (GBPUSD 1.6070, +0.0082, +0.5129%) rose to $1.6061 from $1.6031. Earlier Monday, Japan’s Cabinet Office reported gross domestic product fell 1.1% in October-December on an annualized basis, marking the first economic contraction since July-September 2009. The yearly GDP data for 2010 confirmed that China’s economy has surpassed that of Japan, which it had already done on a quarterly basis. But the latest quarterly figure beat economists’ forecasts. Read more on Japan GDP. Against the Japanese yen, the dollar (USDYEN 83.1300, -0.3800, -0.4549%) slipped to ¥83.18, down from ¥83.46 Friday. See real-time currency quotes and tools.

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