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(Bloomberg) — The dollar held losses against the euro and the yen as investors look to speeches by Federal Reserve officials for clues on monetary policy. A gauge of the greenback against major peers dropped the most since October 2011 last week as banks including HSBC Holdings Plc said the currency’s surge since August is coming to an end. Officials scheduled to speak on Monday include Cleveland Fed President Loretta Mester, a non-voting member, and San Francisco Fed President John Williams, who does vote on policy. “We are watching Fed officials this week,” Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading-services provider, wrote in a note to clients. “The market is weighed down by the dollar’s weakness and the currency is unlikely to trade actively ahead of their remarks.” The dollar traded at $1.0832 against the euro at 8:46 a.m. in Tokyo from $1.0821 Friday, after slumping 3 percent last week. It was little changed at 120.03 yen after sliding 0.6 percent on Friday. The Bloomberg Dollar Spot Index fell 0.1 percent to 1,194.12, after tumbling 2.2 percent last week. Hedge funds trimmed their bullish dollar futures positions to the least since December, according to Commodity Futures Trading Commission data. Net futures position betting on a stronger greenback versus eight major peers in this category reached a record 448,675 contracts in January.

Fed Policy

Fed policy makers on March 18 lowered their median 2015 forecast for the federal funds rate to 0.625 percent from 1.125 percent three months ago. The stronger greenback contributed to weaker exports that would be a “notable drag” on growth this year, Fed Chair Janet Yellen said.
The change in Fed estimates softened the perceived monetary-policy divergence between the U.S. and the rest of the world, which has been a driver of the dollar’s ascent. The dollar has gained 19 percent in the past year, the best performance among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro declined 8.9 percent, while the yen dropped 0.4 percent. “With markets grappling with the exact timing and extent of potential moves — economic data has just come a lot more important and there are some key Fed speeches this week –, it looks as though more volatility is here to stay,” Philip Borkin, Senior Economist, and Sam Tuck, Senior FX Strategist, at ANZ Bank New Zealand Ltd wrote in a note dated March 23.

To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net Naoto Hosoda