* Dollar index, euro below last week's highs ahead of
* BOJ expected to hold steady at 2-day meeting beginning on
TOKYO Dec 19 The dollar edged lower in early
Asian trading on Monday as some investors took profits after its
rise last week to a 14-year peak against a currency basket,
though it remained underpinned by expectations of more U.S.
interest hikes in the coming year.
The Federal Reserve's interest rate forecasts released on
Wednesday after its widely expected rate increase showed three
more hikes 2017, which fuelled the dollar's rise to last week's
The dollar index, which tracks the U.S. currency
against a basket of six major counterparts, was last down 0.3
percent at 102.680. It climbed as high as 103.560 last week.
The euro was last up 0.1 percent at $1.0461, holding
above the nearly 14-year low of $1.0364 notched last week.
The dollar was down 0.3 percent against its Japanese peer at
117.61 yen, taking a breather after climbing to a 10-1/2
month high of 118.66 yen last week.
"With the Christmas and year-end holidays coming, there is
no incentive for investors to take new risks, and there is some
profit-taking, so it is difficult for major currency pairs to
move much," said Kumiko Ishikawa, FX market analyst at Sony
"We'll probably continue to see some adjustments of
dollar-long positions this week," she added.
U.S. dollar net long positions were little changed in the
week through Dec. 13, affirming a trend in place for the last
several weeks since the Nov. 8 election of Donald Trump as U.S.
president on the expectation of more inflationary infrastructure
and fiscal spending.
Net shorts on the yen, meanwhile, rose to their largest
since early December last year, according to Reuters
calculations and data from the Commodity Futures Trading
Commission released on Friday.
Trade data released early in the session showed the impact
of the weaker yen is already apparent, as the country's exports
fell at a slower pace in November. They slipped 0.4 percent in
the year to November, compared to a 2.0 percent annual decline
expected by economists in a Reuters poll.
The Bank of Japan was scheduled to begin a two-day policy
meeting on Monday, at which it is expected to stand pat on its
10-year government bond yield target as the weaker yen helps
Japan's economic prospects, a Reuters poll showed on Friday.
While many investors closed their books in the waning days
of the year, others braces themselves for the possibility of
volatile moves in thin liquidity.
"In five of the last nine years, the last two weeks of the
year have been pretty quiet, but in 2008 and again in 2014, the
last two weeks were the most volatile of the year," Marshall
Gittler, head of investment research at FXPrimus, said in a
(Reporting by Tokyo markets team; Editing by Eric Meijer)