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Dollar soft as hopes for rate hike fade

Tokyo - The yen extended its gains on Monday after a batch of weak US data fuelled more doubts about a mid-year interest rate hike.

In Tokyo the greenback slipped to ¥118.92, from ¥118.99 in New York and well off the ¥119.56 earlier Friday in Asia.

The euro was at $1.0857 and ¥129.12 against $1.0873 and ¥129.38 in US trade, as investors look for any signs of progress in Greece's bailout talks.

On Friday, a US government report on durable goods orders raised new questions about the Federal Reserve's planned interest rate increase.

While the headline number rose 4.0% in March, that was driven by jumps in civilian and military aircraft as well as autos; without them orders fell 0.2%.

The Fed's policy committee meets Tuesday and Wednesday. The US central bank has said any increase in interest rates, which some expect as early as June, would be data-dependent.

Also this week, the Bank of Japan (BoJ) holds a one-day meeting but policymakers are expected to stand pat on fresh measures, despite signs of weakness in the world's number three economy.

"Speculative positions show waning appetite for shorting the yen - the probability of further BoJ easing this week is low," Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow, wrote in a client note.

"Expectations for firm first-quarter US growth are fading and the Fed may soften its tone on economic activity, raising the likelihood that rates will be hiked later in the year. The dollar will face downward pressure for a while."

Eurozone finance ministers ended a heated meeting Friday in the Latvian capital Riga without a breakthrough toward unlocking €7.2bn in bailout cash for Greece to help it avert a default.

Officials were angered by Greece's lack of progress in coming up with reforms required for the payment.

Athens said its leaders will resume talks with creditors Monday after Prime Minister Alexis Tsipras spoke by phone to German Chancellor Angela Merkel.

The dollar was mixed against other Asia-Pacific currencies.

It strengthened to 32.61 Thai baht from 32.49 baht Friday, to 12 957.10 Indonesian rupiah from 12 942.50 rupiah, to 63.62 Indian rupees from 63.38 rupees, and to 44.25 Philippine pesos from 44.24 pesos.

But it weakened to 1 074.05 South Korean won from 1 080.35 won, and to Sg$1.3320 from Sg$1.3405.

The Australian dollar rose to 78.18 US cents from 77.55 cents, while the Chinese yuan eased to ¥19.18 from ¥19.29.


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