Dollar Steadies in Anticipation of More U.S. Data

The dollar has steadied after previously bouncing on Monday with careful investors starting a week crammed with central bank meetings. Moreover, big-ticket U.S. economic data are awaited for clues on the global inflation outlook and policymakers’ responses.

Volume in trade was thinned by holidays in Japan, China and Britain. It has kept a lid on volatility, leaving the dollar to trade where it settled following a leap on Friday. It stood at $1.2040 per euro and climbed to a three-week high of 109.66 yen.

The dollar index held at 91.210, dropping 2% through April. A positive view of world recovery prospects lifted trade-exposed currencies at the expense of the greenback. On Friday, however, it bounced  with upbeat U.S. consumption data.

On Monday, the antipodean currencies Australian and New Zealand dollars were marginally firmer. Though, it was not enough to recover from a dip suffered on Friday.

The AUD added 0.1% $0.7718 to trade around its 20-day moving average. The kiwi added 0.2% higher to $0.7171, also just above its 20-day moving average. The sterling steadied at $1.3825. 

North Korea vowed it would respond to what it considers as hostile U.S. policy, causing the South Korean won to hit a one-week low after.

Meanwhile,  pressure for a national lockdown in India pushed the rupee a little lower.

Expected Data in the Week

The Purchasing Managers Index (PMI) figures for manufacturers on Monday, were positive in Asia and Europe. Those numbers due later are expected to show growth picking up speed in the U.S.

Investors major focus this week, however, will be on U.S. manufacturing surveys due on Wednesday. Additionally, April labour market numbers on Friday. 

Although forecasts are that 978,000 jobs were created in the month,  analysts say the market response may be hard to guess. Investors have begun to worry about strong data possibly prompting central bankers to taper their support.

Dallas Fed President Robert Kaplan called for beginning the conversation about tapering, causing a stir on Friday. The Federal Reserve Chair Jerome Powell has been clear that he is likely to be patient.

Powell’s speech, which will be followed by a raft of Fed officials this week, is due later on Monday. Also slated this week are central bank policy meetings in Australia, Britain and Norway. 

Elsewhere in Australia, no policy changes are expected on Tuesday. Traders are looking forward to a speech by deputy Reserve Bank of Australia governor Guy Debelle on Thursday.