* U.S. Q1 GDP growth accelerated but missed expectations
* Dollar sags vs yen; sterling hits 2-month high
* Focus on Fed and ECB policy meetings, U.S. data
By Masayuki Kitano
TOKYO, April 29 The dollar fell broadly and
sterling hit a two-month high on Monday, as traders continued to
reduce their exposure to the greenback after data last week
showed the U.S. economy grew at a slower-than-expected pace in
the first quarter.
The dollar declined against a swathe of currencies and
dropped 0.4 percent versus the yen to 97.60 yen, edging
away from a four-year high of 99.95 yen set earlier in April
after the Bank of Japan unleashed its drastic monetary stimulus.
The greenback retreated after data on Friday showed U.S.
gross domestic product expanded at a 2.5 percent annual rate in
the first quarter, falling short of market expectations for 3.0
The GDP data came on the heels of a series of weak U.S.
indicators over the past few weeks, including retail sales and
durable goods orders, that have stirred concerns about the U.S.
"It looks like dollar longs are getting flushed out," said
Satoshi Okagawa, senior global markets analyst for Sumitomo
Mitsui Banking Corporation in Singapore.
"The poor GDP reading was big. Cable, Aussie, kiwi, Canadian
dollar, the Singapore dollar...they are all moving," he said,
referring to the broad drop in the U.S. dollar on Monday.
Sterling rose to as high as $1.5526, its highest level since
The pound, which has stayed firm after better-than-expected
UK first-quarter growth data last Thursday tempered expectations
that the Bank of England will add to its asset-buying programme,
last fetched $1.5513, up 0.2 percent for the day.
The U.S. GDP report provides ammunition for the Federal
Reserve to maintain its monetary stimulus. The U.S. central
bank, which holds a two-day policy meeting that starts on
Tuesday, is widely expected to keep purchasing bonds at a pace
of $85 billion a month.
Although the dollar has faced stiff resistance at 100 yen in
recent weeks, many market players expect the greenback to head
higher versus the yen over the medium term due to the BOJ's
aggressive monetary easing.
"We're still bullish dollar/yen. The BOJ story still has a
long way to run," said Gareth Berry, a Singapore-based G10 FX
strategist for UBS.
Besides the Fed's policy meeting, U.S. economic data will be
a focal point this week, especially the closely watched jobs
report on Friday.
In the near-term, the dollar will probably find support near
previous resistance at its March high of 96.71 yen, said Roy
Teo, FX strategist for ABN AMRO Bank in Singapore.
The euro edged up 0.1 percent to $1.3047.
Growing expectations that the European Central Bank may cut
interest rates at its policy meeting on May 2 to support the
euro zone's recession-hit economy have kept a lid on the euro,
which has retreated since hitting a seven-week high of $1.3202
on April 16.
Gains in the euro on Monday were subdued, even after Italian
centre-left politician Enrico Letta named a coalition government
on Saturday, ending two months of damaging political stalemate.
Letta is expected to set out his government's plans in
parliament on Monday and will then need to win a vote of
confidence in both houses to be fully empowered.