* Major currencies hold to tight ranges in Asia
* Japan closed all week, China closed Wednesday-Friday
* Investors await Fed meeting, U.S. inflation and jobs data
By Wayne Cole
SYDNEY, April 29 (Reuters) - The dollar dozed in a snug band on Monday as Japan kicked off a week of holidays, giving investors an extra excuse to idle ahead of a Federal Reserve policy meeting and a raft of global data including on U.S. core inflation and payrolls.
Movements were minimal with the dollar keeping to a mere 14-tick range on the yen and not much more on the euro. Liquidity is set to be puddle deep in Asia this week with China also off from Wednesday to Friday.
All eyes are on the Fed to see what its policymakers made of a first-quarter gross domestic product report that showed strong growth of 3.2 percent, but largely for one-off reasons including a surge in inventories.
Core inflation, on the other hand, surprised by slowing sharply, leading speculators to actually narrow the odds on a rate cut this year. Fed fund futures now imply a rate of 2.20 percent by the year end, from 2.41 percent now.
The March reading for core personal consumption expenditures (PCE), the Fed’s favoured inflation measure, is due later Monday and there is a risk it might slow to 1.6 percent or even 1.5 percent.
“The single biggest macro issue at the moment concerns Fed policy and whether inflation is soft enough to justify an ‘insurance’ rate cut - or two,” said analysts at JPMorgan.
“Chicago Fed President Charles Evans has implied a sustained core PCE at 1.5 percent would justify “insurance” cuts even with growth staying healthy and investors will be listening very closely to (Fed Chair Jerome) Powell on Wednesday for any hints about his thoughts on this topic.”
It was this risk that saw the dollar fall back on Friday despite the upbeat GDP report. Against a basket of currencies, the dollar was a fraction softer at 97.970, having eased from a near two-year peak of 98.330.
Yet the dollar is hardly alone given pretty much every other major central bank has also turned dovish in recent months, keeping their currencies subdued.
The Canadian dollar and Swedish crown, for instance, both took hits last week when their central banks put a halt on future rate hikes.
The European Central Bank is under pressure to keep its stimulus in place, if not to do a new round, while markets are pricing in rate cuts for Australia and New Zealand following weak inflation readings.
The Bank of Japan last week pledged to keep its policy super easy for at least another year, in an effort to dispel talk it was wavering in its commitment.
While the yen gained at the end of last week, that was mainly because speculators chose to cut short positions ahead of this week’s extended Japanese holiday.
Some fear the lack of liquidity could lead to a re-run of the dollar’s flash crash from January when the yen made massive gains in a matter of minutes as bears were forced to cover short positions.
On Monday, the dollar was parked at 111.60 yen, having briefly touched its highest this year last week around 112.39. Chart support comes in at 111.37 and 110.83.
The euro was a shade firmer at $1.1157, but still not far from a near two-year trough of $1.1110.
A swathe of manufacturing surveys from Europe and China are due later this week, along with a first reading on EU GDP. The U.S. payrolls report on Friday is forecast to show a solid increase of 180,000 in April, with unemployment at 3.8 percent. (Reporting by Wayne Cole; Editing by Simon Cameron-Moore)