US Dollar off to slow start in event-packed week
Tokio (Apr 28) The US dollar got off to a quiet start on Monday following a few days of directionless trading with investors unlikely to take aggressive positions ahead of major events out of the United States and euro zone.
Policy reviews by the U.S. Federal Reserve and Bank of Japan (BOJ) will also keep the market cautious in a holiday-shortened week for much of Asia. Many centers in the region will shut on Thursday for the Labour Day holiday, while Japan will be closed on Tuesday.
The dollar index .DXY was flat at 79.741, having last week inched down a mere 0.1 percent. The euro was similarly subdued at $1.3839 after chalking up a modest 0.2 percent gain.
Against the yen, both the dollar and euro found themselves in very familiar territory following a tightly range-bound week.
The greenback bought 102.17 yen, having drifted roughly between 102.00 and 102.80 while the common currency fetched 141.40 yen, still stuck in a 141.00-142.00 range.
The Australian dollar was one of a few major currencies that gave a more lively performance thanks to surprisingly tame inflation data.
The Aussie shed 0.7 percent for the week and was last at $0.9274. It was well supported at $0.9250.
The market has been struggling to find a clear direction after the Easter holidays but analysts expect events this week could help the major currencies break out of their ranges.
The Fed is set to continue paring its massive bond-buying stimulus at its April 29-30 meeting, while the BOJ is expected to maintain its stimulus program at its April 30 meeting.
"While BOJ Governor Kuroda will try to keep the door open for further easing, no indication of immediate actions by the BOJ poses downside risk to USD/JPY," analysts at Barclays Capital wrote in a note to clients.
For dollar bulls, the U.S. jobs report on Friday could be of more significance as markets are expecting the labour market to continue improving following a winter slowdown. Any unexpected weakness could cast doubts on whether the Fed can continue to gradually wind down its bond buying.
For the euro, the inflation data is key to its near-term outlook as another soft reading could add pressure on the European Central Bank to inject more stimulus.
Investors will also be keeping an eye on Ukraine although so far the currency market has shown very little reaction to developments there. In contrast, European stocks on Friday fell as new signs of violence in Ukraine hit sentiment.