Dollar steady after soft U.S. data, Fed's Dudley awaited for cues

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USA inflation is a bit low but should rebound alongside wages as the labor market continues to improve, an influential Federal Reserve official said on Monday, reinforcing the message that a recent patch of weak data is unlikely to derail plans to keep raising interest rates. "With buying interest returning to technology shares in the US, it's likely for Japanese counterparts to attract investors, while higher yields should boost financial stocks".

The US dollar was one of the best performing major currencies after receiving a boost from some hawkish comments from New York Federal Reserve President William Dudley.

The common currency was steady at $1.11965 (EUR=EBS), retaining Friday's 0.5 percent gain.

Repeating much of a similar talk he gave in May, Evans said that while the Fed had essentially achieved its goal of full employment, it has had a "serious policy outcome miss" on its other goal of 2-percent inflation. Britain and the European Union's chief negotiators began talks by stressing the need to quickly tackle uncertainties in the process and underlining their constructive attitude to reach a deal that is good for all.

But analysts say palladium's gains of more than 25 percent so far this year may not be justified given slowing auto sales. Sterling ticked gently lower throughout the day against the dollar, trading down around 0.2 percent at $1.2751 by 1900GMT, having opened the day slightly higher. It hit a low of $16.575 during the session, its weakest since May 19. The trade-weighted index fell to 77.85 from 78.22.

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It declined to 64.82 euro cents from 65.01 cents yesterday following French President Emmanuel Macron's parliamentary victory over the weekend and decreased to 56.74 British pence from 56.96 pence yesterday.

The S&P 500 index (.SPX) closed flat, the Dow Jones Industrial Average (.DJI) ended up 0.1 percent and the Nasdaq (.IXIC) lost 0.2 percent.

Dudley aligned himself with Chair Janet Yellen on Monday and declared his expectation that a tight labor market will eventually trigger a rebound in inflation data that has been unexpectedly weak in recent months. United States gold futures settled down 0.8 per cent at $US1,246.70.

Spot gold was down 0.7 per cent at $US1,244.85 an ounce by 2:35 pm Monday EDT (0435 Tuesday AEST), after falling below the 100-day moving average to $US1,244.27, its lowest since May 17. Brent settled 1 percent lower at $46.91.

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