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Last week, the U.S. Federal Reserve stuck to its view that
current high inflation is expected to be transitory.
The next test of this wait-and-see approach to inflation will be
U.S. CPI data due on Wednesday.
At 0853 GMT, the dollar index was little changed on the day at
94.229, holding below the 15-month high it hit on Friday
following stronger-than-expected U.S. jobs data.
"The tightening labour market will keep pressure on the Fed to
keep tightening policy going forward, and speed up rate hike
plans if labour force participation does not improve as
expected," MUFG strategist Lee Hardman wrote in a note to
clients.
Commodity Futures Trading Commission data showed speculators
scaled back their net long position on the dollar for the fourth
week running in the week to Nov. 2.
Federal Reserve Vice Chair Richard Clarida will speak about
inflation and monetary policy later in the session.
"We have heard a few Fed hawks questioning the need for patience
when it comes to tightening, but similar remarks from centrists
like Clarida would certainly send US short-term rates and the
dollar higher," ING FX strategists wrote in a note to clients.
The Australian dollar, which is seen as a liquid proxy for risk
appetite, was down 0.1% on the day at $0.73992.
The New Zealand dollar was up 0.2% at $0.71395, boosted by Prime
Minister Jacinda Arden announcing that lockdown measures will
likely be phased out by the end of the month.
New Zealand will ease COVID-19 restrictions in Auckland from
Wednesday, as vaccination rates rise.
The euro was a touch higher, up 0.1% at $1.1573.
Euro zone inflation will ease next year and remains too weak in
the medium term, European Central Bank chief economist Philip
Lane told a Spanish newspaper, repeating the bank's
long-standing message that high price growth is temporary.
Britain's pound was steady around $1.3486, having tumbled to a
five-week low last week when the Bank of England surprised
markets by not hiking rates.
Elsewhere, China's export growth beat economists' forecasts in
October, while imports missed expectations, resulting in a
record trade surplus.
But the yuan was steady versus the dollar, holding just under
the key 6.4 level.
Traders are also looking ahead to Chinese producer and consumer
price data due on Wednesday, with annual producer price growth
seen surging to 12% in perhaps a harbinger of further price
pressure to come through global supply chains.
"While the strong trade surplus this year should have somewhat
supported the CNY exchange rates, the overall theme for USD-CNY
is the stability," Commerzbank senior economist Hao Zhou wrote
in a client note.
In cryptocurrencies, bitcoin was up 4.6% at around $66,228 --
not far from a new all-time high -- while ether hit a record
peak of $4,768.07 overnight
(Reporting by Elizabeth Howcroft; Editing by Subhranshu Sahu)
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