Dollar off to slow start in event-packed week, yen firmer

SYDNEY Mon Apr 28, 2014 4:56am BST

1 of 3. A man holds Japanese 10,000 Yen bank notes in front of a bank in Tokyo November 22, 2012.

Credit: Reuters/Kim Kyung-Hoon

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SYDNEY (Reuters) - The dollar got off to a quiet start on Monday following a few days of directionless trading with investors unlikely to take aggressive positions ahead of major events in the United States and the euro zone.

Policy reviews by the U.S. Federal Reserve and Bank of Japan (BOJ) will also keep the market cautious in a holiday-shortened week for much of Asia. Many centres in the region will shut on Thursday for the Labour Day holiday, while Japan will be closed on Tuesday.

The dollar index inched up 0.1 percent to 79.797, staying within its 79.562 to 79.988 range seen over the past two weeks. Moves in the euro were similarly subdued, with the single currency slipping 0.1 percent to $1.3824.

The safe-haven yen held firm as market participants kept an eye on tensions in Ukraine.

"The sense I get is that people are mostly saying they are keeping an eye on risk-off type of topics," said a trader for a Japanese bank in Singapore.

Pro-Russian rebels paraded European monitors they are holding in eastern Ukraine on Sunday, freeing one but saying they had no plans to release another seven as the United States and Europe prepared new sanctions against Moscow.

The dollar eased 0.1 percent against the yen to about 102.12 yen, while the euro slipped 0.2 percent to 141.17 yen.

The market has been struggling to find a clear direction after the Easter holidays but analysts expect events this week could help the major currencies break out of their ranges.

The Fed is set to continue paring its massive bond-buying stimulus at its April 29-30 meeting, while the BOJ is expected to maintain its stimulus programme at its April 30 meeting.

"While BOJ Governor Kuroda will try to keep the door open for further easing, no indication of immediate actions by the BOJ poses downside risk to USD/JPY," analysts at Barclays Capital wrote in a note to clients.

For dollar bulls, the U.S. jobs report on Friday could be of more significance as markets are expecting the labour market to continue improving following a winter slowdown. Any unexpected weakness could cast doubts on whether the Fed can continue to gradually wind down its bond buying.

For the euro, the inflation data is key to its near-term outlook as another soft reading could add pressure on the European Central Bank to inject more stimulus.

(Additional reporting by Masayuki Kitano in Singapore; Editing by Eric Meijer)

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