* New Fed chief with dovish history testifies in Congress
* Markets in tight ranges, no impact of immigration vote on
* Disappointing U.S. jobs data fails to deter Fed taper
* Bank of England has chance to tweak guidance on Wednesday
By Patrick Graham
LONDON, Feb 10 Major currency markets held
broadly steady on Monday ahead of what may prove an important
week for expectations on the timing of central bank policy moves
in Britain and the United States over the next year.
There was little sign of a reaction of the Swiss franc to
Switzerland's vote to reintroduce immigration controls with the
The new head of the U.S. Federal Reserve, Janet Yellen,
testifies in Congress after a second month of softer jobs
figures which most investors for now seem to be putting down to
the weather rather than any weakening of economic recovery.
Yellen, long a supporter of the Fed's ultra-loose policy
approach, must walk a line between maintaining enough support
for the recovery and not spooking markets convinced the U.S.
central bank will cease buying bonds by the end of this year.
That "tapering" is behind this year's main trend so far - a
flood of money out of emerging economies that is returning to
the developed world and supporting the euro, dollar and yen
But that flow, possibly allied to the doubts over the pace
of the U.S. recovery, has helped hold off the surge for the
dollar that many have forecast and kept major currencies in
tight ranges over recent weeks.
"Yellen likely will signal the Fed's intention to continue
tapering, without sounding especially alarmed about the softer
payroll reports of the past two months," analysts from French
bank BNP Paribas said in a morning note.
"We remain constructive on the USD, but recognise that it
may struggle to regain momentum in the immediate future."
The yen, traditionally a safe haven for investors at times
of economic stress, has been among the biggest winners from the
emerging sell-off, halting a slide which had seen it top 105 yen
On Monday it touched its lowest more than a week before
stabilising around 102.10.
"Last week's data was not particularly helpful for the
dollar and this week's data calendar does not look like it will
be strong enough to re-invigorate the dollar bull trend," Dutch
bank ING said in a morning report.
In Britain, an inflation report on Wednesday gives BoE
Governor Mark Carney another chance to convince markets the
bank's forecasts for a hold in interest rates well into next
year are credible.
Analysts are still split on whether Carney will formally
tweak the bank's forward guidance on policy and whether it will
work in pushing back market expectations for the timing of a
first rise in rates from the start of next year.
"There appears scope for UK short rates to decline and this
is something that can also weigh on sterling," RBS strategist
Paul Robson said. "However, we do not expect much
Speculators raised dollar bets in the week through Feb. 4
after paring them last week to the lowest in more than two
months, according to data from the Commodity Futures Trading
Commission released on Friday. It was the 14th
straight long position for the dollar.
Still, the poorer U.S. data, allied to the absence of
expected dovish signs on policy from last week's European
Central Bank meeting, have supported the euro, trading around
$1.3640 early in Europe.
Traders cited a central bank buying dollars at $1.3650.
"The payrolls numbers triggered another small short squeeze
in EUR/USD," ING said.
"It could be another difficult week for those with short
euro positions. Certainly a break above 1.3650 would be worrying
and open up the 1.3720 area."