July 28, 2013 / 11:42 PM / in 4 years

FOREX-Dollar pulls back in Asia ahead of Fed, hits one-mth low on yen

* USD under pressure ahead of Fed meeting

* USD/JPY touches one-month low, threatens chart support

* Plenty of event risk ahead with ECB and BoE meeting, major data

By Wayne Cole

SYDNEY, July 29 (Reuters) - The dollar was on the defensive in Asia on Monday as investors braced for an event-packed week that includes central bank meetings in the United States and Europe, manufacturing data from China and U.S. growth and jobs figures.

The dollar index was 0.14 percent lower at 81.544 and just above chart support at 81.515, its 200-day moving average. The index shed 1.2 percent last week for its third straight weekly loss.

The euro was hovering at $1.3293, just below a five-week peak of $1.3296. Option barriers blocked the way around $1.3300 while the next major chart target was the mid-June high of $1.3415.

The dollar was also giving ground at 97.86 yen having carved out a one-month low of 97.78. Traders were looking for a test of support at 97.65 and a break there would be bearish.

Yet the yen’s rise will not be welcomed by Japanese policy makers since it has pressured the share market and threatens the country’s nascent recovery from deflation.

Indeed, Bank of Japan Governor Haruhiko Kuroda is due to give a speech later on Monday and might try and quell the yen’s gains by emphasising his commitment to massive quantitative easing.

It will be a busy week for central banks in general with the Federal Reserve, Bank of England and European Central Bank all holding policy meetings.

“Our base case is for no significant changes at each of these meetings, but the tail risks around the events have certainly increased, particularly for the FOMC and the BoE,” said JPMorgan strategist John Norman.

He noted an article in the Wall Street Journal had suggested the Fed would consider changing its forward guidance in an attempt to convince markets that rates will stay near zero for a long time to come even if it does begin tapering asset buying.

“The article has raised the risk that the meeting outcome will be more dovish than originally anticipated,” said Norman.

The BoE and ECB are expected to repeat or refine their respective versions of “forward guidance” that policy will stay loose for an extended period.

Among the raft of data coming is the advance reading of U.S. gross domestic product (GDP) for the second quarter on Wednesday which is expected to show annualised growth of just 1 percent.

The data will also be subject to major benchmark revisions, the first since July 2009, which could raise the level of GDP and perhaps change the past pace of growth.

Thursday sees a range of manufacturing data from around the world, starting with the official China PMI. The market is braced for a dip under 50 and a weak result will only heighten fears of a hard landing for the world’s second largest economy.

Friday features the ever-influential U.S. payrolls report with forecasts favouring a rise of 185,000 for July and a dip in the jobless rate to 7.5 percent.

A strong report would support the case for the Fed to start rolling back its stimulus in September and so underpin the dollar.

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