Dollar slips as central banks meet; euro recovers ground

NEW YORK: The US dollar slipped against the euro on Monday, as the single currency recovered recent losses while most major currency pairs stuck to narrow trading ranges ahead of economic data and central bank monetary policy meetings this week.

The U.S. dollar index, which measures the greenback against a basket of six currencies, was down 0.43 percent at 94.27. Among the majors, the greenback slipped the most against the euro, with the common currency 0.48 percent higher, as it recovered from its worst weekly performance against the greenback in six weeks.

"The euro is a bit firmer, like it was on Friday, which is typical of the recent price action pattern, where the euro gets stronger on Fridays and often there is some follow through on Mondays," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. "I call this pattern a tooth saw."

The euro's gains follow a sharp loss last week after the European Central Bank reaffirmed that rates would stay low through the summer of 2019. Analysts said the rebound was largely because traders felt it had been oversold last week.

On Monday, German and Spanish inflation remained slightly above the European Central Bank's price stability target in July, preliminary data showed on Monday, supporting the ECB's cautious approach of winding down its monetary stimulus only gradually.

Major central bank activity is likely to be on investors' radar as the Bank of Japan ends a two-day meeting on Tuesday, the Federal Reserve concludes its meeting on Wednesday and the Bank of England is expected to raise interest rates on Thursday, a week which could set the near-term course for currencies.

The Fed is not expected to raise interest rates this week.

The BoJ will consider changes to its massive stimulus program to make it more sustainable, such as allowing greater swings in interest rates and widening its stock-buying selection, Reuters reported last week, citing people familiar with the central bank's thinking.

"Even if they tell us they are talking about making changes that is likely to be enough for the market to try and take JPY stronger," Brad Bechtel, managing director, at Jefferies in New York, said in a client note.

On Monday, the dollar was little changed against the yen at 110.93 yen.

Investors will also be watching U.S. economic data this week, including data on payrolls.

Meanwhile, the Swedish crown jumped against the dollar after forecast-beating second-quarter GDP numbers from Sweden.

The pound rose 0.32 against the dollar, even as its modest gains reflected concern among investors about the currency's prospects ahead of the widely anticipated interest rake hike.