* Deal to avoid US govt shutdown lifts dollar sentiment
* Investors warily monitor developments in North Korea
* Liquidity seen thin before Japan's Golden Week holidays
* Fed meeting, U.S. jobs data awaited this week
TOKYO, May 1 The dollar shrugged off early
modest losses in holiday-thinned Asian trading on Monday, while
solid European inflation data underpinned the euro.
Several markets across Asia and Europe were closed for the
May Day holiday. Tokyo markets will be closed for three days
from Wednesday for a string of holidays known as Golden Week,
and many investors take additional time off.
The dollar index, which tracks the greenback against
a basket of six rival currencies, edged up 0.1 percent to 99.144
Bolstering dollar sentiment, U.S. congressional negotiators
have hammered out a bipartisan agreement on a spending package
to keep the federal government funded through the end of the
current fiscal year on Sept. 30, a senior congressional aide
said on Sunday.
The House of Representatives and the Senate must approve the
deal before the end of Friday and send it to President Donald
Trump for his signature to avoid the first government shutdown
"It is hard for markets to make big moves with holidays in
so many places today, and people are just waiting for more
information to come out," said Harumi Taguchi, principal
economist at IHS Markit in Tokyo.
Against its Japanese counterpart, the dollar nudged 0.1
percent higher to 111.68.
U.S. Labor Department data on Friday showed private wages
and salaries accelerated 0.9 percent in the first quarter to
mark the largest increase in 10 years, suggesting the U.S.
Federal Reserve might still hike interest rates two more times
The firm wage growth helped offset news on Friday that the
U.S. economy grew at its weakest pace in three years in the
first quarter as consumer spending almost stalled.
"Dollar/yen is holding up, despite the weaker U.S. GDP,"
said Masafumi Yamamoto, chief currency strategist for Mizuho
Securities in Tokyo, as U.S. Treasury yields rose.
The yield on benchmark 10-year Treasury notes
was at 2.298 percent in Asian trading, up from its U.S. close of
2.282 percent on Friday.
But market participants continued to watch for any
developments around North Korea, limiting losses for the
perceived safe-haven yen.
On Sunday, U.S. President Donald Trump increased diplomatic
contacts with allies in Asia to secure their cooperation to
pressure North Korea over its nuclear bomb and missile programs.
The Fed will meet on Wednesday this week, with no policy
change expected, while the U.S. employment report for April will
be issued on Friday.
The euro was steady on the day at $1.0894,
underpinned by solid euro zone inflation figures on Friday that
analysts said could prompt the European Central Bank to take a
more hawkish tone in its June statements.
Official flash estimates put euro zone inflation at 1.9
percent in the first quarter, above estimates of 1.8 percent.
The ECB's target is below but close to 2 percent.
Short positioning in euro eased in the week ended April 25,
according to calculations by Reuters and Commodity Futures
Trading Commission data released on Friday, after independent
centrist Emmanuel Macron came out ahead of anti-European Union
rightist Marine Le Pen in the first round of the French election
last weekend. The runoff vote will be held on Sunday.
Meanwhile, net shorts on the Canadian dollar that week
ballooned to 42,642 contracts, the largest since early February
2016 as the United States worked to renegotiate the terms of its
NAFTA deal with Canada and Mexico.
The dollar edged up 0.1 percent against the Canadian dollar
on Monday to C$1.3673 after logging a 14-month high of
C$1.3697 on Friday.
The Australian dollar inched down slightly to
$0.7484, moving back toward last week's low of $0.7440, which
was its weakest since mid-January. It posted a loss of 1.8
percent in April, the largest monthly loss this year.
The Reserve Bank of Australia (RBA) will hold its monthly
policy meeting on Tuesday and is considered certain to hold
rates at a record low 1.5 percent following two cuts last year.
(Reporting by Tokyo markets team; Editing by Eric Meijer)