Dollar opens down in Asia following solid gains last week on Fed

Investing.com - The dollar lost mild ground early in Asia on Monday against the yen and Australian dollar in a light data day.

Earlier, Westpac reported consumer sentiment in New Zealand rose to 116.7 from 121.2. NZD/USD traded at 0.8145, up 0.31%, after the survey.

Elsewhere, USD/JPY traded at 108.95, down 0.11%, while AUD/USD held at 0.8935, up 0.06%, and EUR/USD at 1.2836, up 0.04%.

Last week, the dollar rallied to fresh six year highs against the yen and hit a new 14-month peak against the euro as expectations for an early hike in U.S. interest rates continued to underpin investor demand for the greenback

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.08% to 84.87. It ended Friday’s session up 0.63% to 84.93, the highest level since July 2013, capping its tenth consecutive week of gains.

The dollar has rallied in the past two months as economic data indicated that the U.S. recovery is progressing strongly, while growth in Japan and the euro zone appears to be faltering.

On Wednesday the Federal Reserve offered fresh guidance on its plans to raise interest rates, underlining the diverging policy stance between it and central banks in Japan and Europe, which look likely to continue with looser monetary policy.

The Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, but it outlined in more detail how it will start to raise short term interest rates when the time comes.

In the week ahead, investors will be awaiting Tuesday’s data on euro zone private sector activity, amid concerns that the recovery in the region is losing momentum. Preliminary data on manufacturing activity in China will also be closely watched.

The week will also bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims.

On Monday, New Zealand is to release private sector data on consumer sentiment.

European Central Bank President Mario Draghi is to appear before the European Parliament's Economic and Monetary Committee, in Brussels.

The U.S. is to release private sector data on existing home sales.