FOREX-Dollar steady as traders await views of Fed's Yellen

Mon Feb 10, 2014 10:36am EST

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By Richard Leong

NEW YORK, Feb 10 (Reuters) - The dollar held steady against major currencies on Monday as traders waited to hear the economic and policy views of Janet Yellen, the new head of the Federal Reserve, following a disappointing January report on the U.S. labor market.

Yellen, who is viewed as an architect of the U.S. central bank's current ultra-loose policy, will make her first appearance as Fed chair before Congress Tuesday and Thursday.

"It doesn't provide a lot of incentive to move the dollar out of its current trading range," said Bob Lynch, head of G10 FX strategy at HSBC Bank USA in New York.

The dollar index last traded down 0.02 percent at 80.671 after hitting its lowest in about 1-1/2 weeks.

The greenback was mildly weaker versus the yen at 102.16 yen , down 0.2 percent on the day. This followed a choppy session on Friday where the dollar managed a 0.2 percent gain against the safe-haven Japanese currency, rebounding from an initial sell-off due to data that showed a second straight month of below-forecast jobs growth.

The euro was flat against the dollar at $1.3632 and fell 0.2 percent against the yen at 139.23 yen.

While analysts anticipate U.S. lawmakers will question Yellen, the first female head of the Fed, on subjects from monetary policy to bank regulations, they reckon she will stick to replies that would not alter expectations the Fed will hold short-term rates near zero for an extended period to support the economy.

Nor do analysts foresee she would say anything to upset expectations the Fed will back away from its tapering of its massive bond-purchase stimulus even after news U.S. employers added only 113,000 workers last month, far fewer than the 185,000 increase forecast by analysts.

The Fed has reduced its third round of quantitative easing twice, to $65 billion in February and Wall Street widely expects monetary policy-makers to taper by another $10 billion a month at their March meeting.

"The market is not indicating it's expecting any policy changes. I'm not sure we're going to get anything new," HSBC's Lynch said.

In other G10 currency action, Norway's crown advanced against the euro and dollar after higher-than-expected inflation was read as eliminating the chances of an interest rate cut.

Georg Von Wowern from Scandinavian bank Nordea said Norway's central bank would look past the inflation numbers, which were influenced by post-Christmas sales.

But he said the crown, which fell almost 15 percent last year against the euro, had been looking oversold and may have room to regain more ground.

"We continue to think the crown is vulnerable, but there is the possibility of more of a correction in the short term," Von Wowern said.

The crown rose about 0.5 percent from Friday versus the dollar and euro at 6.1402 crowns to the dollar and 8.3711 crowns per euro.

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