April 21, 2014 / 11:36 PM / 4 years ago

FOREX-Dollar outperforms in quiet trade, event risk looms

* U.S. dollar gains vs many peers in subdued overnight session

* Easter long-weekend break keeping markets thin

* China data, NZ rate review, ECB’s Draghi speech eyed

By Ian Chua

SYDNEY, April 22 (Reuters) - The dollar held at two-week highs against a basket of major currencies early on Tuesday after a subdued session overnight, with many global financial centres shut for the Easter long-weekend holiday.

Traders expect a slow start with no major economic data out of Asia, although Australian inflation numbers, a survey on China’s manufacturing sector and an interest rate review in New Zealand over the next two days should provide some interest.

The dollar index was last at 79.963, having gained nearly 0.2 percent on Monday. Against the yen, the greenback was at 102.63, not far from a two-week high of 102.71.

The yen suffered a mild setback on Monday after data showed Japan’s export growth slowed to its weakest in a year, adding pressure on policy makers to inject more stimulus.

The euro, which also scaled a two-week peak of 141.84 yen on Monday, was last at 141.55. It dipped to a near two-week low against the greenback at $1.3787 although trading overnight was light with much of Europe shut.

“With ECB President Mario Draghi scheduled to speak later this week, the fresh batch of ECB rhetoric may undermine the bullish sentiment surrounding the single currency,” said David Song, analyst at DailyFX in New York.

“EUR/USD may continue to give back the rebound from earlier this month should the central bank head look to implement more non-standard measures ahead of the second-half of 2014.”

Draghi is scheduled to give a keynote speech in Amsterdam on Thursday. He recently made clear the euro’s strength is a possible trigger for the central bank to ease policy.

The greenback also gained a bit of ground against commodity currencies such as the New Zealand dollar, which sagged to a 2-1/2 week trough of $0.8555.

While the market is fully priced for a second interest rate hike by the Reserve Bank of New Zealand on Thursday, speculation has mounted that the central bank might temper aggressive tightening expectations for this year.

“We expect the one-page statement will strike a more cautious tone than previously, mainly due to the high exchange rate and soft inflation data,” said Imre Speizer, strategist at Westpac Bank in Auckland. (Editing by Richard Pullin)

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