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The
Bank of Canada meets on Wednesday, then the Bank of Japan and
European Central Bank meetings are on Thursday. Next week the
Reserve Bank of Australia meets on Tuesday, the U.S. Federal
Reserve on Wednesday, and the Bank of England and Norges Bank on
Thursday.
In equity markets there were signs of improved risk appetite due
to strong earnings, with European stocks opening higher
following a rally in the Asian session.
But the dollar index held steady, down 0.1% at 93.724 at 1132
GMT.
Simon Harvey, a currency analyst at Monex Europe, said that a
flattening of the U.S. yield curve also contributed to the
dollar's downward move, by improving risk appetite.
The greenback rose 0.2% against the Japanese yen, with the pair
at 113.930, holding below the four-year high of 114.695 reached
last week.
The Bank of Japan is set to maintain its massive stimulus
programme and slash this year's inflation forecast in a sign it
has no intention to follow other central banks that are
preparing exits from crisis-mode policies.
The Canadian dollar was steady ahead of Wednesday's meeting, at
which the central bank is expected to raise its inflation
forecast and to largely end stimulus from its pandemic-era bond
buying program, starting a tentative countdown to the first
interest rate hike since October 2018.
The Australian dollar, seen as a liquid proxy for risk appetite,
was up 0.3% at $0.75155. Last week, it rose above the key $0.75
level for the first time since July.
"If the rally on the commodity market continues, AUD is likely
to remain supported for now," wrote Commerzbank strategist
You-Na Park-Heger in a client note.
The New Zealand dollar was up 0.4% at $0.71895.
The euro was up 0.1% at $1.162. Expectations that the European
Central Bank will take a dovish stance when it meets on Thursday
have weakened the euro in recent sessions.
"We believe that there is a good chance that the ECB will push
back against current market pricing for ECB rate hikes," wrote
MUFG currency analyst Lee Hardman in a note to clients.
"The ECB's continued reluctance to raise rates should continue
to weigh on the euro as other G10 central banks embark on hiking
cycles."
ING strategists noted that, so far in 2021, energy-exporting
currencies whose central banks are preparing to tighten - such
as the Canadian dollar or Norwegian crown - have outperformed.
"The worst performers in the G10 space are the JPY and the EUR,
both net energy importers, suffering the negative income shock
from higher energy prices and with some of the most dovish
central banks in the world," they wrote in a note to clients.
"Low energy inventories for both gas and crude and no signs that
supply frictions are going to be eased anytime soon suggests
this story should continue to play out."
China's offshore yuan was a touch stronger against the dollar,
with the pair changing hands at 6.3771.
A call between China's Vice Premier Liu He and U.S. Treasury
Secretary Janet Yellen was seen as positive for Sino-U.S.
relations.
Bitcoin was down around 0.6% at $62,742.65 at 1138 GMT, having
fallen below the all-time high of $67,016.50 it reached last
week.
(Reporting by Elizabeth Howcroft; editing by John Stonestreet
and Angus MacSwan)
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