SINGAPORE- The dollar steadied marginally on Monday but remained near multi-week lows against some major currencies as traders stayed on guard ahead of monetary policy decisions due this week from several central banks, including the Federal Reserve.
The US currency was pinned near a one-month low against the British pound and the Aussie at $1.2568 and $0.6740, respectively, with a holiday in most of Australia making for thinned trade.
Policy meetings of the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set the tone for the week, as markets seek clues from policymakers on the future path of interest rates.
US May inflation data is also out on Tuesday as the Fed kicks off its two-day meeting.
“Any USD move should remain restrained and recent ranges should still hold ahead of FOMC,” said Christopher Wong, currency strategist at OCBC. “Perhaps a softer (inflation) print can negate USD’s bullish pressure.”
Money markets are leaning towards a pause from the Fed when it announces its interest rate decision on Wednesday, according to the CME FedWatch tool, expectations that sent Wall Street surging to a 13-month high on Friday as risk sentiment improved.
The US dollar index clocked a loss of nearly 0.5 percent last week, its worst weekly drop since mid-April, and was last 0.09 percent higher at 103.62.
Conversely, a clear majority of economists polled by Reuters expects the ECB to hike its key interest rate by 25 basis points this week and again in July, before pausing for the rest of the year as inflation remains sticky.
The euro slipped 0.08 percent to $1.0740 in Asia trade, after having risen 0.4 percent last week, its first weekly gain in roughly a month. – Reuters
