By Kevin Buckland
TOKYO (Reuters) -The yen strengthened against the dollar on Monday as signs the Bank of Japan will exit negative interest rates at its policy meeting next week contrasted with expectations that the Federal Reserve will cut rates in June.
The dollar index, which measures the currency against the yen and five other major rivals, stuck close to a nearly two-month low reached on Friday, when monthly payrolls figures signalled a cooling U.S. labour market, keeping the Fed on track to ease policy.
The greenback eased 0.1% to 146.96 yen, heading back toward the five-week low of 146.48 reached on Friday.
The dollar index was flat at 102.72, hovering not far from Friday’s low of 102.33, a level not seen since Jan. 15.
Dollar-yen “should remain heavy this week, with bounces into 148 likely to attract sales as expectations continue building that the BOJ might tweak policy (on) 19th March,” Westpac strategists wrote in a note to clients.
Meanwhile, the dollar index “looks vulnerable to a deeper setback,” and could test support at 101 this week, the note said.
A growing number of BOJ policymakers are warming to the idea of ending negative rates at their March 18-19 gathering, sources told Reuters, amid expectations for hefty pay rises from Japan’s biggest firms when results of this year’s annual “shunto” wage negotiations are due on Wednesday.
Elsewhere, Jiji news agency reported the BOJ is considering a new quantitative monetary policy framework to replace the current yield curve controls.
By contrast, traders lay odds at 73% for the Fed to cut rates by the conclusion of its June 11-12 meeting, according to the CME Group’s FedWatch Tool, as softness in Friday’s jobs data reinforced Fed Chair Jerome Powell’s comments earlier in the week that policymakers were “not far” from having the confidence needed to cut rates. The next Fed meeting is March 19-20.
The euro was little changed at $1.0944 after jumping as high as $1.0980 on Friday for the first time since Jan. 12. The European Central Bank left rates at record highs last Thursday while cautiously laying the ground to lower them later this year.
Sterling was little changed at $1.2850, after pushing to the highest since late July at $1.2890 on Friday amid bets the Bank of England will be slower to cut rates than the Fed or ECB.
In cryptocurrencies, bitcoin was last down 0.17% at $68,301, as it continued to hover below the record peak of $70,175 from Friday.
(Reporting by Kevin Buckland; Editing by Christopher Cushing and Kim Coghill)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.