By Rae Wee
SINGAPORE, Jan 30 (Reuters) - The dollar distanced
itself from an eight-month trough on Monday ahead of a slew of
central bank meetings this week, though gains were capped by
dovish repricing of the U.S. Federal Reserve's rate-hike
expectations as compared to more hawkish counterparts.
The U.S. dollar index , which measures the greenback
against a basket of currencies, rose 0.03% to 101.92, after
having hit an eight-month low of 101.50 last week.
It was on track for a fourth consecutive monthly loss of
more than 1.5%, pressured by expectations that the Fed was
nearing the end of its rate-hike cycle and that interest rates
would not have to rise as high as previously feared.
Sterling was up 0.04% at $1.2405, while the euro rose 0.06% to $1.0874.
Movement was subdued ahead of policy meetings from the Fed,
the European Central Bank (ECB) and the Bank of England (BoE)
later this week.
"We will range trade a little bit as the market tries to
assess how the central banks behave... I think, for all three
it's going to be more about what they say than what they do,"
said Rodrigo Catril, a currency strategist at National Australia
Bank (NAB).
The Fed is widely expected to deliver a 25 basis point rate
hike - a down-shift from its 50bp and 75bp increases seen last
year - while market watchers say the BoE and ECB are likely to
raise rates by 50bp each.
The euro, which is headed for a nearly 1.5% monthly gain,
has drawn support from continued hawkish rhetoric by ECB
policymakers and ebbing fears of a deep recession in the euro
zone.
Elsewhere, the New Zealand dollar slipped 0.05% to
$0.6491, while the yen jumped close to 0.2% to 129.62
per dollar.
A panel of academics and business executives on Monday urged
the Bank of Japan to make its 2% inflation target a long-term
goal, instead of one that must be met as soon as possible, in
light of the rising cost of prolonged monetary easing.
The Australian dollar fell 0.3% to $0.7088 but was
on track for a monthly gain of nearly 4%, after the shock that
Australia's inflation rate shot to a 33-year high last quarter
caused traders to ramp up bets that the Reserve Bank of
Australia will have to tighten interest rates further. With China returning from its Lunar New Year holiday, focus
will be on the upcoming release of its purchasing managers'
index (PMI) data on Tuesday.
"The market will be looking ... hopefully not to get
disappointed," said NAB's Catril.
"So far, the data coming from China, or the vibes coming
from China, do play to the view that a good reopening in terms
of activity is likely to unfold."
Lunar New Year holiday trips inside China surged 74% from
last year after authorities scrapped COVID-19 travel curbs,
state media reported on Saturday.
The onshore yuan jumped against the dollar on
Monday, rising roughly 0.5% to 6.7530, as investors cheered
signs of economic recovery indicated by robust holiday spending
and tourism data.
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(Reporting by Rae Wee; Editing by Bradley Perrett and
Christopher Cushing)
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