Dollar-index .DXY down 0.2 pct at 77.120
* High oil prices likely to keep Fed policy loose
* Expectations of a hawkish ECB supports euro
(Changes dateline, recasts, adds quote, previous TOKYO)
By Neal Armstrong
LONDON, Feb 28 (Reuters) - The dollar hovered close to three-month lows on Monday, hampered by expectations that the threat to growth from high oil prices would keep U.S. monetary policy loose, in contrast to the more hawkish outlooks of other major central banks.
The Swiss franc remained firm as ongoing tensions in Libya and fears of contagion kept its safe-haven attraction intact.
The dollar index, which tracks the greenback's performance against a basket of major currencies, was down 0.2 percent at 77.120 .DXY. A break below 76.881 would have the index back at lows not seen since early November.
The dollar has been hit hard by rising oil prices as investors fret the U.S. economy will suffer more than others, given its strong reliance on consumer spending for growth.
"Rising oil prices help to widen the perceived policy divergence between the Fed and other major central banks," said Lee Hardman, currency analyst at BTM-UFJ
"The ECB sees rising crude as an upside risk to inflation rather than the Fed's view that it will be negative for growth. This is increasing the risks of a near-term overshoot for the euro,"
The euro EUR= was up around 0.1 percent versus the dollar at $1.3761, within sight of a three-week high of $1.3837 hit on Friday. Technical analysts said a break of the euro's year-to-date high at $1.3862 was needed for fresh momentum.
But it was also susceptible to profit-taking as the latest data showed currency speculators had boosted bets in favour of the euro to the highest since October in the week ended Feb. 22. [IMM/FX]
Expectations that the European Central Bank at its meeting on Thursday may signal its willingness to raise rates have been supporting the euro, as a series of ECB policymakers have sounded a hawkish tone in recent weeks.
Fed officials are keeping an eye of growth and have set a high bar for tweaking their $600 billion bond buying program. Financial markets will look to congressional testimony by Fed Chairman Ben Bernanke this week to try to discern the current state of debate within the central bank.
"The dollar is likely to stay weak for now as investors expecting central banks to hike rates in response to higher oil prices favour the euro, pound and Swedish krona," said UBS fx analysts in a note.
http://uk.reuters.com/article/2011/02/28/markets-forex-idUKLDE71R0KD20110228
* High oil prices likely to keep Fed policy loose
* Expectations of a hawkish ECB supports euro
(Changes dateline, recasts, adds quote, previous TOKYO)
By Neal Armstrong
LONDON, Feb 28 (Reuters) - The dollar hovered close to three-month lows on Monday, hampered by expectations that the threat to growth from high oil prices would keep U.S. monetary policy loose, in contrast to the more hawkish outlooks of other major central banks.
The Swiss franc remained firm as ongoing tensions in Libya and fears of contagion kept its safe-haven attraction intact.
The dollar index, which tracks the greenback's performance against a basket of major currencies, was down 0.2 percent at 77.120 .DXY. A break below 76.881 would have the index back at lows not seen since early November.
The dollar has been hit hard by rising oil prices as investors fret the U.S. economy will suffer more than others, given its strong reliance on consumer spending for growth.
"Rising oil prices help to widen the perceived policy divergence between the Fed and other major central banks," said Lee Hardman, currency analyst at BTM-UFJ
"The ECB sees rising crude as an upside risk to inflation rather than the Fed's view that it will be negative for growth. This is increasing the risks of a near-term overshoot for the euro,"
The euro EUR= was up around 0.1 percent versus the dollar at $1.3761, within sight of a three-week high of $1.3837 hit on Friday. Technical analysts said a break of the euro's year-to-date high at $1.3862 was needed for fresh momentum.
But it was also susceptible to profit-taking as the latest data showed currency speculators had boosted bets in favour of the euro to the highest since October in the week ended Feb. 22. [IMM/FX]
Expectations that the European Central Bank at its meeting on Thursday may signal its willingness to raise rates have been supporting the euro, as a series of ECB policymakers have sounded a hawkish tone in recent weeks.
Fed officials are keeping an eye of growth and have set a high bar for tweaking their $600 billion bond buying program. Financial markets will look to congressional testimony by Fed Chairman Ben Bernanke this week to try to discern the current state of debate within the central bank.
"The dollar is likely to stay weak for now as investors expecting central banks to hike rates in response to higher oil prices favour the euro, pound and Swedish krona," said UBS fx analysts in a note.
http://uk.reuters.com/article/2011/02/28/markets-forex-idUKLDE71R0KD20110228
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