NEW YORK: The US dollar edged higher against the yen and commodity currencies pared losses after traders viewed a strike by Kuwaiti oil and gas workers as supportive of oil prices and anticipated low volatility this week.
The dollar was last up 0.07 percent against the yen at 108.81 yen after slumping to a session low 107.81 yen, which was near a 17-month low of 107.61 yen touched a week ago.
The safe-haven yen had earlier rallied, while commodity currencies plunged, after a plan to cap oil production at current levels fell apart on Sunday when Saudi Arabia demanded that Iran join in at a meeting in Doha.
Benchmark Brent crude prices slid by as much as 7 percent in early trade as investors got their first chance to react to the news, but clawed back some losses and were last down 2.6 percent.
The strike in Kuwait, which was seen as limiting oil supply in the short term, and markets' expectation that the European Central Bank would not announce a surprise policy shift this week blunted the impact of the Doha meeting, said Richard Cochinos, head of European G10 FX strategy in London.
The strike in Kuwait led the OPEC member to reduce its crude oil output and refining production on Sunday. The ECB will meet in Frankfurt on Thursday.
"Volatility is expected to remain soft," Cochinos said. He said expectations of calmer markets led large swings in commodity currencies after the Doha meeting to stabilize somewhat.
Commodity-linked currencies such as the Canadian dollar and Russian ruble were still nursing losses, but rose from their lows, while the Australian dollar fully recovered and eked out a 9-1/2-month high against the greenback of $0.7739.
Expectations that the ECB would not announce a policy shock this week helped support the euro against the dollar, said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York.
"This meeting will be a placeholder," he said.
The euro was last up 0.35 percent against the dollar at $1.1320. Last month the European Central Bank unleashed a volley of interest rate cuts, additional monthly bond purchases and more cheap loans to banks.
The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.19 percent at 94.513. The dollar was last down 0.32 percent against the Swiss franc at 0.9640 franc.
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