Dollar falls for a third day on rate pause bets

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Gold prices are higher Monday morning, lifted by a weaker USA dollar ahead of release of the minutes of the Federal Reserve's monetary policy meeting in December. It dipped 0.1 per cent against the yen and eased marginally versus the euro and sterling in early Asian trade.

Gold fell about 0.7 percent in the previous session, its biggest one-day decline in about two months on the back of robust data, but has recovered since. FTSE 100 Index futures gained 0.1 percent.Japan's Topix index rallied 2.8 percent at the close.

"The Fed is listening to the market and has acknowledged flashing market signs", said Sim Moh Siong, currency strategist at Bank of Singapore. "The market certainly liked what (Fed Chair Jerome) Powell said on Friday and the reaction has been negative for the dollar".

Stocks across Asia kicked off the week with strong gains after soothing Federal Reserve comments and an easing of monetary policy in China stoked a renewed appetite for risk assets.

Financial markets have been rattled by heightened worries about slowing global growth, especially in the United States and China, though data on Friday showed strong USA job growth.

The dollar outperformed other currencies in 2018 due to the Fed being the only major central bank to hike rates. Bostic, who is not a voting member of the Federal Open market Committee this year, said the Fed may only need to raise rates once in 2019.

The dollar index stood near 2-1/2-month lows as investors grew increasingly convinced that the Federal Reserve will not raise interest rates this year amid uncertainties over the United States economy.

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Expectations of no further rate hikes this year is likely to keep the greenback under pressure.

The dollar index is down by 0.238 points, or about 0.25% at 95.512, coming off an earlier high of 95.688. The move frees up $116 billion for new lending as it tries to reduce the risk of a pronounced fall in the pace of economic growth.

A further step by China's central bank late Friday to secure liquidity to the slowing economy may also help assuage concerns. The single currency has gained around 1.5 per cent over the last three trading sessions as the outlook towards the greenback worsened.

US officials are meeting their counterparts in Beijing this week for the first face-to-face talks since US President Donald Trump and Chinese President Xi Jinping agreed in December to a 90-day truce in a trade war that has roiled global markets.

The two sides have until March 1 to make a deal, after which Trump has pledged to ramp up tariffs to 25 percent, from 10 percent, on $200 billion worth of Chinese imports.

The People's Bank of China increased holdings to 59.56 million ounces by the end of December, or about 1,853 metric tons, from 59.24 million ounces previously, according to data on the central bank's website.

The effect was apparent in the Australian dollar, which is often used as a liquid proxy for emerging markets and China risk.