The dollar in the background after the light data fans rely on the Fed by Reuters

By Hideyuki Sano

TOKYO (Reuters) – The dollar licked its wounds on Monday after US statistics rose, the Federal Reserve will cut rates later this year while the pound has capped at nearly nine months in the hope from a delay of the British exit from the European Union.

The dollar index versus a basket of six major currencies () () edged down 0.1% to 96.481, after losing 0.81% last week, the biggest loss since the end of the month of August.

US economic data below expectations released on Friday reinforced expectations that the Fed could adopt an accommodative stance this week, pushing US yields down to 10-week lows.

US manufacturing output fell 0.4% in February, which slowed for a second consecutive month, while mill activity in New York State was weaker than expected this month with index of 3.7.

The yield on 10-year Treasury bills fell to 2.580% (), its lowest level since January 4, while futures on federal funds projected a rate cut of about 40% this year, against nearly zero percent earlier this month.

"The 10-year rate closed below 2.6%, for the second time this year after being below that level one day early in the year," said Chotarto Morita, chief strategist at SMBC Nikko Securities.

"It remains below this level in a sustainable way, it will be the first time since January 2018, when yields began to rise, anticipating an acceleration of growth and inflation following the cuts. d & # 39; taxes.

In this context, many investors are waiting for the Fed to suggest that rates will remain unchanged in the near future and unveil a plan to end its balance sheet later this year at its meeting that will be held. will finish Wednesday.

"The focus is on the Fed's dovish." I had the impression that the markets had gone a little too far in the expectation of rate cuts. risk that these views will disappear if the Fed's graphs show that directors are raising rates this year, "said Ayako Sera, market economist at the Sumitomo Mitsui Trust Bank.

When the dollar weakened, the other major currencies rose by default. The euro edged up to $ 1.1366 (), stable in Monday's trading, after gaining 0.86%, the largest weekly increase since the end of September.

The Australian dollar reacted more, gaining 0.4%, peaking at $ 0.7115 in two weeks. .

The dollar has reached 11.50 yen , little changed the day but out of the nine-day high of Friday, 111.90.

The British pound was close to the $ 1.3380 record reached the highest in the last nine months of last week, supported by a claim that a Brexit without a transaction would probably be avoided. He stood at $ 1.3292 .

It is not clear whether British Prime Minister Theresa May can get support for her Brexit deal in Parliament, which has twice rejected her bid by a wide margin.

May has only three days to get approval for her exit contract from the European Union if she wants to go to a summit with bloc leaders on Thursday.

May warns the hard-line Brexiteers that if they do not approve his divorce agreement, Britain's exit from the European Union could take a long delay and imply to participate in parliamentary elections of the block.