* Japan, Europe central bank meetings in focus this week
* U.S. government shutdown worries weigh on dollar
(Updates prices and market activity to U.S. market open,
changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Jan 22 (Reuters) - The euro edged higher against
the U.S. dollar on Monday, as market participants awaited the
outcome of the European Central Bank's meeting on Thursday for
possible clues to future shifts in the bank's monetary policy.
The dollar index, which measures the greenback against
six rival currencies, was down 0.16 percent at 90.428, close to
a three-year low, as the U.S. government shutdown weighed on
Investors were also focused on a Bank of Japan policy
announcement on Tuesday.
"Generally speaking the majors are all holding in familiar
territory here ahead of a busy week of economic news and data,
particularly on the central bank front," said Omer Esiner, chief
market analyst, at Commonwealth Foreign Exchange in Washington.
Analysts do not expect Japan to signal any policy shift.
The ECB is likewise unlikely to ditch a pledge to keep
buying bonds at next week's meeting as rate setters need more
time to assess the outlook for the economy and the euro, three
sources close to the matter have said.
"If we get kind of status quo statements from both central
banks, which is very likely, that could provide a little bit of
a boost for the dollar," said Esiner.
The idea of other major central banks moving closer to more
normal policies has been a key headwind for the dollar over the
The greenback had a slightly weaker tone on the day but did
not concede too much ground against most major currencies as a
government shutdown in Washington largely failed to worry the
The U.S. government shutdown took effect at midnight on
Friday after Democrats and Republicans failed to agree on a
last-minute deal to fund government operations.
The Senate scheduled a vote on a stopgap spending measure
for noon on Monday.
"The markets are taking all of this in relative stride, for
now," said Greg Peters, senior portfolio manager at PGIM Fixed
"That said, the longer this shutdown persists, the markets
will increasingly be concerned," he said.
Sterling was up 0.82 percent against the greenback at
$1.3963, after earlier rising as high as $1.397, its highest
since June 2016.
Traders pushed the British pound higher after five
consecutive weeks of gains against the dollar, the currency's
longest winning streak since 2014.
"This is a continuation of the move we saw for the last
couple of weeks. I think the move is looking increasingly
overdone." said Esiner.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by
Jennifer Ablan; Editing by Meredith Mazzilli)
First Published: 2018-01-22 02:19:07
Updated 2018-01-22 18:32:15
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