USD/JPY

The dollar weakened on Monday as investor reassessed the chances of an earlier-thanexpected interest rate hike by the Federal Reserve, prompting a degree of recovery in risk appetite. Currency market took the Fed's surprise discount rate decision last week as a signal the U.S. central bank was coming closer to tightening its benchmark rate, despite assurances from Fed policymakers to the contrary. But a benign U.S. inflation reading on Friday, with consumer prices rising less than forecast in January, caused market to pull back those rate expectations. The dollar index, which measures the dollar's value against a basket of currencies, dipped 0.1 percent to 80.570, having retreated from an eight-month high of 81.342 hit on Friday. The dollar gave up slight gains versus the yen to trade flat at 91.60 yen.

Forecast:

This week, all eyes will be on Fed chief Ben Bernanke's testimony in Congress on Wednesday and Thursday. Investor will be looking for clues on rates after the Fed surprised many by raising the discount rate last week.

USD/IDR

The pairing turned softer this morning and opened at 9300 figure, and ongoing lower to 9288 as the greenback retreated. Regional equities are somewhat firmer in Asian hours on the modest Wall Street gain and firmer Nikkei in the morning. China stocks however opened flat after an extended Chinese New Year break. Meanwhile, Finance Minister has proposed to increase the budget deficit for 2010 to 2.2% of GDP (previous: 1.6%), according to a senior official. The government plans to spend more on "energy and food price stabilization" efforts. Improved risk appetite and regional stocks seen boosting the IDR but traders are wary of fresh bidding from corporate and state banks ahead of the month-end. Then the market closed at 9305