The dollar hovered near a three-week low versus a basket of major currencies on Monday, anchored by doubts that the U.S. Federal Reserve will raise interest rates by year-end. The dollar index, which measures the greenback's value against a basket of six major currencies, was last trading at 94.780. On Friday it had touched a low of 94.692 .DXY, its weakest level since Sept. 18. The euro edged up 0.1 percent to $1.1372 EUR=, having set a three-week high of $1.13875 EUR= on Friday. The dollar held steady against the yen at 120.21 yen JPY=. The greenback had retreated broadly last week, especially against commodity and emerging-market currencies. That rally in growth-linked currencies came after weak U.S. jobs data released earlier in October prompted investors to push back expectations for the timing of the Fed's first rate increase in almost a decade to next year. A focus now is whether the rise in commodity-linked and emerging market currencies will prove to be a short-lived rally driven mainly by position squaring, or turn into a more enduring uptrend. Some analysts are expressing surprise over the intensity of the rally seen in these currencies over the past week. "I personally thought it would have stopped by now," said Teppei Ino, an analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore. "This might end up lasting until various products recover to their Aug. 11 levels, and if that is the case, the Aussie could for example could rise to around 74 U.S. cents," Ino said. China's surprise devaluation of the yuan on Aug. 11 had stoked concerns about the health of the Chinese economy and a slowdown in global growth, weighing on the Australian dollar as well as emerging Asian currencies. The Australian dollar edged up 0.1 percent to $0.7341 AUD=D3, staying firm after surging 4 percent last week for its biggest weekly gain since late 2011. On Monday, it hit a fresh seven-week high at $0.7347. The Australian dollar and emerging Asian currencies are probably just enjoying a temporary bounce, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. "While there has been some short-covering for now, I don't think you can aggressively go long the Aussie," Okagawa said. "Fed liftoff has only been pushed back... I think this will just be a brief respite," he added. Trading activity during Asian hours is likely to be thinner than usual with Japanese markets closed for a public holiday. U.S. markets will also be shut on Monday for a holiday. The market may take its cues from Chinese trade data due on Tuesday, as well U.S. economic indicators such as retail sales data on Wednesday and the consumer price index on Thursday. ECONUS
