SYDNEY (Reuters) - Commodity currencies held onto modest gains early on Tuesday, having risen broadly on a further rebound in oil prices and as the U.S. dollar faded somewhat after a payrolls-inspired rally ran out of steam.
The Canadian and New Zealand dollars were among the best performers in a session that saw all the major currencies remain well within recent ranges.
“Very little in the way of data or developments to drive markets left higher oil as a key focus, which helped lift CAD and other commodity currencies to the top of the performance rankings,” said Greg Moore, senior currency strategist at RBC Capital Markets.
“The euro was not impacted much by ongoing headlines on Greek negotiations.”
Greek Deputy Prime Minister Yannis Dragasakis said on Monday negotiations were ongoing with the European Union over the country’s debt and bailout problems, but that no agreement had been reached.
The common currency bounced back to $1.1326 EUR=, having found support at a one-week trough of $1.1270 on Monday.
Against the yen, the common currency fell as far as 133.67 EURJPY=R before recovering to 134.31. The dollar eased to 118.54 JPY=, giving back about a third of Friday's 1.4 percent rally to 119.23.
All that left the dollar index .DXY a tad softer at 94.568. Still, it remained not far from an 11-year peak of 95.481 scaled last month.
Speculation that the Federal Reserve will hike interest rates sometime this year has been a pillar of the dollar’s rally that started around the middle of 2014.
In recent weeks, doubts grew that the Fed will actually be able to tighten at a time when other major central banks were easing. But surprisingly strong payrolls data last Friday put the risk of a 2015 hike back in play.
Dallas Fed President Richard Fisher, an outspoken hawk, reiterated that he expects the Fed to raise rates “some time this year”.
In Asia, the focus will be on China’s inflation data for January due at 0130 GMT. A soft number is likely to fuel worries about economic growth, but should also give policymakers room to inject more stimulus. So such an outcome could be viewed positively by markets. ECONCN