TOKYO Reuters Risk currencies hovered above their recent lows against the dollar and the yen on Monday, as fears about slowdown in the global economic recovery appeared to have subsided for now.
The outlook for U.S. inflation and the speed of the Federal Reserves future policy tightening are back in focus ahead of Tuesdays consumer price data and Fed Chair Jerome Powells testimony from Wednesday.
If we see strong data, the Fed could bring forward their projection for their first rate hike further from their current forecast of 2023. That would also mean they have to finish tapering earlier, said Shinichiro Kadota, senior FX strategist at Barclays.
The euro traded at 1.1873, edging back from its threemonth low of 1.17815 set on Wednesday while against the yen the common currency stood at 130.87 yen, off Thursdays 212month low of 129.63 yen.
Sterling also ticked up to 1.3900 while the Australian dollar bounced back to 0.7487 from Fridays sevenmonth low of 0.7410.
Risk currencies slipped earlier last week as investors curtailed their bets on them, in part as economic data from many countries fell short of the markets expectations.
Concerns about the Delta variant of the novel coronavirus also added to the cautious mood although few investors thought the economic recovery would be derailed.
Selling in risk currencies subsided by Friday, however, and sentiment was bolstered further after China cut banks reserve requirement ratio across the board, to underpin its…