The dollar started Monday trade on a firm footing, having recovered recent losses as major central banks were quick to burnish their dovish credentials after the Federal Reserve last week delayed a long-anticipated hike in U.S. interest rates. Further lifting the mood of dollar bulls were comments from a top Fed policymaker, John Williams, who said a rate hike this year is still likely given the decision to stand pat was a "close call". The dollar index was back at 95.305 .DXY, well off a three-week low of 94.063 set on Friday. Against the yen, the greenback popped to 120.08 JPY=, rebounding from a trough around 119.04. The euro slid to $1.1285 EUR=, having recoiled from Friday's peak of $1.1460. Traders said failure to close at a technical level above $1.1400 had also prompted some selling in the common currency. It has now retraced about 50 percent of this month's rally from $1.1087 to $1.1460. Not helping the euro, the European Central Bank's chief economist, Peter Praet, reiterated the bank's "readiness and decisiveness" to modify its trillion-euro bond-buying program should economic turbulence merit decisive action, according to an interview in a Swiss newspaper. Praet comments came after ECB Executive Board member Benoit Coeure on Friday said monetary policy is on diverging paths in the euro zone and the United States. Not to be outdone, Bank of England chief economist Andy Haldane on Friday said the bank's next move may be to cut rates, rather than raise them. The dollar's rebound was broad, knocking sterling to $1.5522 GBP=D4 from a three-week high of $1.5659. Commodity currencies were not spared, with the Australian dollar dipping below 72 U.S. cents once again, from a high of $0.7280. Yet, traders said the greenback's recovery was more about position adjustment rather than a return of a bull run given the huge uncertainty surrounding the timing of a Fed hike. "In our view, the USD should struggle to gain significant upside traction this week because U.S. interest rate expectations are unlikely to adjust higher," said Elias Haddad senior currency strategist, at Commonwealth Bank. With the Fed having sounded a cautious tone on the health of the global economy, the focus this week will likely turn to China and the flash PMI report on Wednesday. Trading is Asia is likely to be thinned by a three-day holiday in Japan. Japanese financial markets reopen on Thursday.
