* Dollar index touches 1-week high
* Moves in major currencies modest
* ECB continues to sound dovish, may weigh on euro
(Updates prices, adds comments)
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, July 7 The dollar edged higher
on Monday and touched its highest level in more than a week
versus a basket of major currencies, staying on firm footing in
the wake of last week's solid U.S. jobs data.
The dollar index rose 0.2 percent to 80.340. It
touched a high of 80.351 earlier on Monday, its highest level
since June 26.
The greenback held steady versus the yen near 102.14 yen
, after having risen 0.7 percent last week.
"It wouldn't be surprising to see a rise toward 102.50 yen,"
said Bart Wakabayashi, head of foreign exchange for State Street
Global Markets in Tokyo, referring to the near-term outlook for
the dollar against the yen.
"But if you ask whether we will see a new trend, that
probably won't be the case," he added.
While there is focus on when the U.S. Federal Reserve's
eventual interest rate hike cycle may start, Fed policymakers
will probably err on the side of caution and refrain from
raising rates earlier than the market expects, Wakabayashi said.
Last week's solid U.S. jobs data prompted traders to
slightly increase bets that the Fed will lift rates in June next
year. Several economists toyed with the idea of bringing forward
their forecasts for a Fed rate hike, although most held firm.
The euro eased 0.1 percent to about $1.3585, having
pulled back from a high of $1.3701 on July 1, its highest level
in about six weeks.
The single currency could stay under pressure after a top
European Central Bank official underscored the need for interest
rates to remain low for longer.
ECB policymaker Benoit Coeure, while urging euro zone
governments to do their part to boost growth, said rates must
stay very low for a long time to ensure monetary stability.
"One should expect a divergence of monetary conditions
between the euro zone and the United States and Britain - where
interest rates will at some point be lifted," he said on Sunday.
Against the yen, the common currency was at 138.75
, down from last week's peak of 139.30.
Sterling remained a market darling and stayed within easy
reach of last week's six-year high of $1.7180. The
Canadian dollar, also in favour at the moment, stood at C$1.0666
per USD, just off a six-month high of C$1.0620 on
The Australian dollar, in contrast, was still smarting from
Reserve Bank of Australia Governor Glenn Stevens' remarks about
it being overvalued.
The Aussie, nursing a 0.7 percent loss last week, eased 0.1
percent to $0.9356. Immediate support is seen at
$0.9323, the 61.8 percent retracement level of its May 29-July 1
Investors in Asia looking for fresh inspiration will
probably have to wait a little longer, given a dearth of major
economic data due in the region.
In Europe, German industrial production figures and a euro
zone sentiment report are due later in the day.
Key events this week include Chinese inflation data and
minutes of the Federal Reserve's last policy meeting on
Wednesday, the Bank of England's rate review on Thursday, and
profit results and outlooks from major U.S. companies. The
second quarter U.S. earnings season gets under way this week.
(Editing by Richard Borsuk)