The Dollar Index traded down 0.1% at 104.067, staying near three-month highs
The U.S. dollar inched down in early European trade Monday, giving up some of its recent gains in holiday-affected trade ahead of the release of the latest Fed minutes for clues of the outlook for U.S. interest rates.
At 09:00 GMT, the Dollar Index traded down 0.1% at 104.067, staying near three-month highs.
The dollar registered gains last week, its fifth consecutive positive week, after data showed both U.S. producer prices and consumer prices rose more than expected in January, raising the prospects of the Fed pushing back the start of its rate-cutting cycle to the start of summer compared with March at the beginning of the year.
The main focus this week will be on the minutes of the Fed meeting from last month, scheduled for Wednesday, while several Federal Reserve officials are also due to speak this week.
In Europe, EUR/USD was 0.1% higher at 1.0783, trading in a tight range as traders await Tuesday’s ECB survey of negotiated wage rates, and then the release of the flash PMIs for February on Thursday.
The European Central Bank’s wage data will be of importance given how much policymakers have warned about high wage growth, even though it is a well known lagging indicator.
The issue will be how much, if at all, negotiated wages slowed from the earlier survey of nearly 4.7% YoY, said ING analysts in a note. Here, a high figure could raise expectations that the wider wage release in late April will also come in on the high side and finally wipe out the possibilities (now priced at 36%) that the European Central Bank will reduce rates in April.
GBP/USD was 0.2% higher at 1.2622, with sterling helped by the slight dollar weakness as well as the spillover from Friday’s data showing U.K. retail sales increased at their fastest pace in almost three years in January.
