Also boosting the safe-haven dollar was escalating tension between the United States and China after a U.S. military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday. The euro slipped 0.2% to touch a nearly three-week lows of $1.0769. The single currency had surged to a 10-month high on Thursday after the European Central Bank lifted its deposit rate to 2.5% and promised a 50 basis point rate hike in March.
On Monday, Austrian central bank chief Robert Holzmann said the risk of the ECB not raising interest rates high enough was still bigger than that of lifting them too much as inflation in the euro area remained far too high.
YEN WOBBLES The yen weakened after the Nikkei newspaper reported, citing anonymous government and ruling party sources, that Bank of Japan Deputy Governor Masayoshi Amamiya was being sounded out to be the next governor.
In a news conference on Monday, Deputy Chief Cabinet Secretary Yoshihiko Isozaki said there was no truth to the Nikkei report. The yen was 0.5% weaker at 131.90 per dollar, having touched three-week lows of 132.60 earlier in the session.
"Amamiya has helped Kuroda since 2013 on monetary policies, and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalisation could progress under the new chief," Saxo Markets strategists said. The BOJ's loose policy settings have drawn increasing criticism from many quarters, including opposition politicians and traders, for distorting market function.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Joice Alves in London and Ankur Banerjee in Singapore; Editing by Jacqueline Wong)
