The dollar stood near its lowest level in three months against a resurgent euro, and traders pared earlier bets the Federal Reserve may move soon to taper its stimulus though markets were not fully convinced that higher U.S. inflation is transient.
The dollar index, measuring the greenback against a basket of six currencies, was hovering at 90.045, a tad above a three-month low of 89.646 set on Friday.
Minutes from the Fed’s April policy meeting released last week showed a sizable minority of policymakers wanted to discuss tapering bond purchase on worries that pouring more money to an economy on the mend could stoke inflation.
Still, Fed Chairman Jerome Powell’s repeated comments that it is not yet time to discuss a reduction in quantitative monetary easing has led many investors to believe it will be months before the central bank actually tweaks policy.
The White House said on Friday it had pared down its infrastructure bill to $1.7 trillion from $2.25 trillion, with cuts to investments in broadband and roads and bridges, but Republicans dismissed the changes as insufficient for a deal.
With investors pre-occupied with threats of accelerating inflation, U.S. PCE (personal consumption expenditures) data, due on Friday, is seen as one of the biggest tests for markets this week.
The euro traded at $1.2179, flat so far on Monday and off a three-month high of $1.2245 touched on Wednesday.
Some analysts said the currency was capped by comments from European Central Bank President Christine Lagarde on Friday that it is still too early for the bank to discuss winding down its 1.85 trillion euro emergency bond purchase scheme.
Still, the euro and other European currencies have been bolstered by rising optimism about economic reopenings in the region from coronavirus lockdowns.
The British pound stood at $1.4144, off Friday’s three-month peak of $1.4233.
The yen was little moved at 108.92 per dollar, trapped between a high of 109.785 hit after a strong U.S. inflation data and a low of 108.34 in the wake of soft U.S. payrolls data, both touched earlier this month.
· Yuan edges up as PBOC reiterates no change to FX policy
China's yuan inched higher against the dollar on Monday, even against a weaker fixing, after a senior central bank official over the weekend reiterated no change to the currency policy.
Deputy governor of the central bank, Liu Guoqiang, said on
Sunday that fluctuations in either direction will become the
norm for China's currency, with the yuan exchange rate
continuing to depend on market supply and demand, as well as
changes in global financial markets.
Prior to market opening, the PBOC set the midpoint rate
at 6.4408 per dollar, 108 pips or 0.17% weaker than
the previous fix of 6.43.
In the spot market, onshore yuan opened at 6.4380
per dollar and was changing hands at 6.4330 at midday, 15 pips
firmer than the previous late session close.
· Cryptocurrencies fought to find a footing on Monday after even weekend cheerleading from Tesla boss Elon Musk seemed unable offset selling pressure from spooked investors or nerves stemming from a gathering crackdown on the asset class in China.
· S. Korea's c.bank moves to develop pilot digital currency
South Korea's central bank on Monday said it will choose a technology supplier to build a pilot platform for a digital currency, moving a step closer to creating a central bank-backed digital currency.
The Bank of Korea said it is seeking a partner through an open bidding process to research the practicalities of launching a central bank digital currency (CBDC) in a test environment - the first such exploratory step in Asia's fourth largest economy.
The BOK's efforts come as the spread of bitcoin and other cryptocurrencies has opened up the possibility that competitors of traditional cash could change how the financial sector operates.
Reference: Reuters, CNBC
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