Dollar firm ahead of global inflation data
dollar held steady on Monday, but was set for its first monthly loss this year, as investors were focused on U.S., European and Japanese inflation data to guide the global interest rate outlook.
Foreign exchange trade has been dominated by the hunt for «carry» in recent months, punishing low-yield currencies and supporting the dollar, while U.S. data has blown hot and cold and dented policymakers' confidence on the rates outlook.
Several major pairs have hugged tight ranges. The euro, which gained 0.9% on the dollar last week, was in the middle of a range it has held for more than a year at $1.0845.
The euro offered little reaction to a survey on Monday that showed German business confidence worsened in May, against forecasts for an improvement.
Trading on Monday was thinned out by holidays in Britain and the United States.
German inflation data on Wednesday and euro zone readings on Friday will be watched for confirmation of a European rate cut that traders have pencilled in for next week.
ECB chief economist Philip Lane said on Monday the pace at which the central bank cuts rates will depend on the strength of underlying inflation.
Sterling was testing the top side of a range it has held this year at $1.2745.
Friday's reading for the U.S. core personal consumption expenditures price index, the Federal Reserve's preferred inflation measure, is expected to be steady month-on-month.
The dollar had fallen back after data showed a slowdown in consumer price rises in April and confirming the trend could pull it
