Dollar holds steady as markets await clues on rate cut timing
Shafaq News/ The dollar held firm on Monday as last week's data showed that U.S. inflation was still high, raising questions about the timing of the Federal Reserve's tapering plans, while the yen stayed weak around the crucial 150 level against the dollar.
U.S. markets are shut for the Presidents' Day holiday, which could keep trading volumes low throughout the day.
The yen has hovered around 150 level in the last few days, prompting officials to comment on the currency moves and keeping markets on alert to a possible intervention by Japanese authorities to stabilize the stuttering currency.
On the day, the yen strengthened 0.20% to 149.94 per dollar but remains down about 6% for the year, while against the euro yen hovered around three-month lows of 161.925.
Latest weekly data from the U.S. markets regulator shows speculators hold a net short yen position worth $9.2 billion, a 2-1/2-month high as expectations that the Bank of Japan would swiftly move away from its ultra easy policy recede.
The dollar index, which measures the U.S. currency against six major rivals, started the week little changed at 104.20 after clocking five straight weeks of gains. The index is up 3% this year as traders adjust their rate cut expectations.
Data last week showed both U.S. producer prices and consumer prices increased more than expected in January, with the apparent stickiness in inflation raising the prospects of a delayed start to the Fed's rate cuts.
Traders are now betting that June would be the starting point of the easing cycle compared with March at the beginning of the year, CME FedWatch tool showed.
Investor focus this week will be on the minutes of the Fed meeting from last month, scheduled for release on Wednesday. Several Fed officials including Christopher Waller and Raphael Bostic are also due to speak this week.
Elsewhere, the euro last bought $1.0782, while the sterling was at $1.26205, up 0.16% on the day.
The pound got a lift on Friday after data showed UK retail sales grew at their fastest pace in nearly three years in January, although that did little to shift expectations around the Bank of England's monetary policy outlook.
Markets still anticipate 64 basis points of cuts from the BOE this year.
The Australian dollar rose 0.15% to $0.6542, while the New Zealand dollar advanced 0.24% to $0.6139 as Chinese markets returned from a long holiday with modest gains.
China's yuan slipped against the dollar on Monday but losses were limited by signs of encouraging holiday spending.
(Reuters)
