(Updates after start of European trade, changes dateline from
* Market added to bullish bets on dollar in past week
* Euro steadies around eight-month trough
* FOMC, U.S. GDP and nonfarm payrolls main focus this week
* Euro zone inflation due Thursday
By Patrick Graham
LONDON, July 28 The U.S. dollar hovered near
six-month highs against a basket of major currencies on Monday,
with data and policy releases this week set to determine whether
its strongest week since March last week prefaces a broader move
The euro had stabilised a touch in an Asian session weakened
by a holiday in Singapore. But it was still trading just above
its weakest in eight months. Another half cent fall
would take it to its lowest since September of last year.
Two strong weeks running for the dollar have encouraged
belief that the U.S. currency is finally ready to make good on
forecasts for a long-awaited recovery as economic growth there
easily outpaces that in mainland Europe.
But the scale of the dollar's moves - a 2 percent rise
against the euro this month - also increase the odds of some
players cashing in some of those gains.
"We think the euro-dollar move may pause for breath at the
start of this week before another shift lower at the end of the
week," said Adam Myers, head of European currency strategy at
Credit Agricole in London.
"The market is clearly short on the euro but there doesn't
quite seem to be the fuel over the next day or two to drive it
much lower and that may squeeze some of those positions."
Euro zone inflation, already uncomfortably near zero for
European Central Bank policymakers, is due on Thursday and will
be prefaced by a steady drip of German regional and national
The other big number is U.S. non-farm payrolls on Friday,
with expectations for Wednesday's Federal Reserve statement
dampened by a series of appearances by chair Janet Yellen and
other policymakers in recent days.
Monday's only top-line number in Europe is data on credit
and money supply. The euro was steady at $1.3431 in early
"There is a 'wait-and-see' mood ahead of the U.S. employment
figures and the Fed meeting," said Kyosuke Suzuki, director of
forex at Societe Generale in Tokyo.
Numbers on Wednesday are expected to show the U.S. economy
grew at a 3.2 percent annual pace in the second quarter, up from
2.9 percent in the first. Nonfarm payrolls are expected to show
a rise of 231,000 in July after they increased 288,000 in June.
Yellen said this month that the Fed could raise rates sooner
than initially expected if labour markets continued to improve
and most economists expect the U.S. central bank to start
raising interest rates in the second half of next year.
The dollar index was steady at 81.045, after it
peaked at 81.084 on Friday, a high not seen since early
February. So far this month, it has rallied around 1.6 percent,
on track for its best monthly gain since January.
Against its Japanese counterpart, the dollar was steady at
The latest figures from the Commodity Futures Trading
Commission showed currency speculators increased their bullish
bets on the greenback in the week ended July 22.
U.S. Treasury yields, however, remained pinned near recent
lows, with the yield on the benchmark 10-year U.S. Treasury note
at 2.478 percent in Asia, not far from its U.S.
close of 2.469 percent on Friday. The fact that the 10-year
yield remains well below 3 percent suggests that investors
betting on the dollar were not driven by any material change to
the U.S. economic outlook.
Analysts at Barclays said this week's U.S. data could
challenge that perception.
"Overall, we expect a relatively upbeat set of data
releases, which ought to give the U.S. dollar further support
over the week," they wrote in a report to clients.
"We do not expect the Fed to deliver any major surprises,
with further tapering of $10 billion likely to be announced."
(Additional reporting by Lisa Twaronite in Tokyo; Editing by