The U.S. dollar steadied near a two-week low on Monday as investors scaled back bets on a Federal Reserve rate hike this year, while the yen remained pinned near a 40-year low, keeping investors nervous about what Tokyo might do next.
The Japanese yen struggled around four-decade lows on Monday, raising the risk of official intervention, while the dollar steadied after last week's soft jobs report lessened the odds of an imminent interest rate hike.
The yen last traded around 162.14 per dollar, just above last week's low of 162.84, the weakest since 1986, leaving traders nervous after a sudden surge in buying briefly lifted the currency on Thursday.
"The risk-reward is no longer as one-sided as it was only a week ago," Scutt said.
"As such, for the first time in several months, I'm moving to a more neutral stance on (the dollar index).
The U.S. dollar steadied near a two-week low on Monday as investors scaled back bets on a Federal Reserve rate hike this year, while the yen remained pinned near a 40-year low, keeping investors nervous about what Tokyo might do next.
The Japanese yen struggled around four-decade lows on Monday, raising the risk of official intervention, while the dollar steadied after last week's soft jobs report lessened the odds of an imminent interest rate hike.
The yen last traded around 162.14 per dollar, just above last week's low of 162.84, the weakest since 1986, leaving traders nervous after a sudden surge in buying briefly lifted the currency on Thursday.
The dollar found its feet after having posted its worst weekly performance since April last week, weighed down by a U.S. payrolls report that showed job growth slowed sharply in June, which, together with the weaker oil price, has curbed market expectations for a rate increase this month.
Investors are now looking ahead to the minutes of the Federal Open Market Committee's (FOMC) June meeting on Wednesday for clues about the rate outlook.
New Chair Kevin Warsh has given little away so far, other than to say last week that anyone thinking the Fed may go easy on inflation, which he acknowledged had cooled recently, could be "disappointed".
"But will the rest of the committee follow suit? Waller, for example, argued only a few months ago that you'd have to be 'crazy' to consider cutting rates. Will he provide another similarly definitive signal? That's what traders should be watching for," City Index strategist David Scutt said, referring to Fed policymaker Christopher Waller, who Scutt said tended to be a "lead indicator for the direction of travel on the FOMC".
The dollar index, which tracks the performance of the U.S. currency against six peers, hit a 13-month peak last week, but has since retreated as expectations for a July rate hike have faded.
"The risk-reward is no longer as one-sided as it was only a week ago," Scutt said.
"As such, for the first time in several months, I'm moving to a more neutral stance on (the dollar index). Respect what the price is telling you. Right now, it says the next move is no longer a one-way bet," he said.
