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    Asian Session – Dollar steady and markets muted in thin holiday trading

    The US dollar was flat in thin Asian trading at the start of the week, as the greenback held on to its post non-farm payroll gains from Friday. With many markets closed for the Lunar New Year, the only major data out today was from Japan.

    Japan’s current account surplus in December was smaller than expected, while wage growth data showed earnings remained muted in 2015. Average wages rose by 0.1% year-on-year in December but were down 0.1% in real terms during the same period. For the full year 2015, wages rose for the second consecutive year and were up by 0.1%.

    Weak wage growth was one of the reasons the Bank of Japan introduced negative interest rates last month. In a summary statement released today, members of the Bank’s policy board who voted against the move argued that the introduction of negative rates could lead to increased competition between other central banks and make it less attractive for banks to sell government bonds to the BoJ.

    The yen was back near the levels seen 2½-week ago as the dollar made only limited gains against the Japanese currency after Friday’s US jobs report, which was broadly positive. The greenback edged higher to 117.23 yen in late Asian trading.

    The euro also rose against the yen, climbing to 130.67 yen but remained near Friday’s lows against the dollar at 1.1148. The pound was firmer though against the dollar at 1.4522.

    Crude oil prices moved higher on Monday with US futures up 0.7% at $31.11 per barrel. Increased efforts by some oil producers to limit supply provided some support to the market. A meeting was held between OPEC members Venezuela and Saudi Arabia over the weekend to discuss the supply glut but no decision was reached.

    Commodity currencies came off Friday’s lows with the Australian dollar firming to 0.7117 against the greenback, while the New Zealand dollar was last trading at 0.6643.

    The rest of the day is likely to be unusually quiet on the data front with only the labor market conditions index in the US getting some attention. Traders are likely to focus on Yellen’s testimony to Congress later in the week for further direction.

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